Sale of a building lot

[rayandsue]

We sold a building lot in 5/21, and I received a 1099-S on 2/17/22 after I had already filed my taxes. The property was purchased in 1995 and was sold at about $7000.00 loss. from what I read, if it was sold at a loss it doesn't need to be claimed.

Thank You

[PII removed]

[Critter-3 · Accepted solution]

You must amend the 2021 return to report the loss even if it is not deductible before the IRS sends you a CP2000 looking for taxes on the amount of the sale reported on the 1099-S.   If you don't report the basis to offset the sale the IRS assumes the basis was zero and the entire sale is taxable.   And if this land was held for investment purposes then the loss is deductible. 

[Mike9241 · Accepted solution]

when a 1099-S is filed the IRS gets a copy. the problem is that the IRS assumes your tax basis in the sale is ZERO making the entire proceeds taxable. Amend

[rayandsue]

Thanks for the reply. I file an amended return Yesterday.