Wednesday, December 05, 2012

Short sales and income tax

A reminder to sellers who closed a short sale in 2012. If you had forgiven debt, you have reportable income. The absence of a 1099 from the lender does not release you from the obligation to report the forgiven debt as income. On the other hand, if the lender did not provide a release of the balance due, there is no income to report. But, you're still on the hook for the unpaid balance.

2012 short sellers, if you haven't done so already, contact your accountant or tax adviser now for how best to handle your possible tax liabilities. There may be beneficial strategic moves you can make before the end of the year.

"I have turned down a lot of money for things that would have made me feel cheesy."  _____Tom Petty