Schedule c sale business property

Forum|Forum|3 years ago
April 10, 2023
2 replies
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Turbo tax is removing my sale of property since its a loss is that correct? Also does anyone know if i can add Debt Forgiveness to my cost b

Best answer by DavidD66

In general, the sale of business property (real or tangible property used in your trade or business) is reported on Form 4797 - Sales of Business Property. If you are self-employed, you would enter it in the business section of the program, but it would not show up on Schedule C. Turbo Tax would not remove your sale because it was loss. Can you clarify: Did you forgive debt owed to you, or was debt you owed forgiven by someone else? Was it business related?

DavidD66Answer

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jp007Author

So would it show up schedule D ?

also yes the debt forgiveness was business/ law suit that I can not recover and sent that person/ business a 1099 for the debt forgiveness

jp007Author

I got the schedule c sale to work correctly, however can I add debt forgiveness to my sale of expense to my basis ?

GeorgeM777

It is not clear whether you have a debt. It appears you have a favorably result in a lawsuit; however, you cannot apparently collect on that judgement. Whether a favorable lawsuit, and your inability to collect, is the type of business bad debt that can be deducted on Schedule C is beyond the advice we can offer. For this you will have to discuss the matter with your personal tax advisor.

Generally, a business bad debt is a loss from the worthlessness of a debt that was either created or acquired in a trade or business or closely related to your trade or business when it became partly to totally worthless. IRS Publication 535, Business Expenses, provides a list of the type of business debts that can be deducted on Schedule C. The type you have described appears not to fit into the categories listed in Publication 535, and for that reason, you need to discuss this issue with your personal tax advisor. If you get an opinion that your lawsuit does meet the definition of a business bad debt, then it would be deductible on Schedule C as per IRS guidelines for business bad debts.

Here is a link to IRS Publication 535. Use the topic list in the left margin and select Types of Business Bad Debts.

IRS Pub 535, Business Expenses

@jp007

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