Tax Law (Questions About Taxes)/Vacant Land Sale Tax



We bought vacant land in 2005 for purchase price of 68,900. We financed 53,825. In 2012, the bank agreed to let us sell it at a loss for 3750.00. The title company sent us a 1099-S statement with 3750 listed as Gross Proceeds. I am trying to enter it under the sale of land with net proceeds of 3750 but am unsure what to put for the cost basis.


Thanks for your question.

Your cost basis is somewhat complex.

If you paid tax on the cancellation of debt income, your basis is $68,900.  If you excluded the cancellation of debt income on your return, you must reduce your basis by the amount of cancelled debt.

The loss is deductible only if you purchased it as investment property.  If deductible, you can offset the loss against other capital gains.  In addition, you can deduct an additional $3,000 of loss each year until it is used up.

Hope this helps.

John Stancil, CPA

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John Stancil, CPA


I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at I also offer seminars and consultations to churches and clergy on their tax issues at Also visit my blog, I am listed on Tax Connections at Prepare and file your own taxes at


I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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