What To Do About IRS Error?

Home Fairmark Forum Taxation of Investments What To Do About IRS Error?

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    Taxpayer owns rental home (with 2 others). Rental had a loss in 2018 due to long vacancy. Taxpayer filed showing 0 loss due to AGI limitations. However IRS applied loss to AGI resulting in lower taxable income and larger refund.

    Taxpayer see 2 choices:
    1) Leave as is, which might mean amending state return to conform. Next year, due to occupancy, taxpayer expects a gain and will not use the originally reported loss.

    2)Convince IRS they are wrong and that the original return is correct.
    The loss will be disallowed for 2018 and used in 2019 when a profit is expected.

    The net result is that after 2019, the two paths lead to the same general
    outcome………although taxpayer has use of the excess refund from 2018 for one yr.

    Taxpayer is thinking that 1) is the path of least resistance. What would you do?


    “…showing -0- loss due to AGI limitations,” you say. What “AGI limitations” are you referring to?

    • This reply was modified 2 years, 8 months ago by snargle.

    Passive rental losses may be deducted under certain circumstances……..
    active participation, jt AGI < 150K.


    It may take the IRS up to 16 weeks to process amended returns. File Form 1040-X to amend.

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