Tax Law (Questions About Taxes)/sale of rental property


We sold a rental property in 2013.  The buyers did not have an inspection.  The sewer backed up and they are suing.  It appears that we will have to pay them some money back in 2014 plus we will have attorney fees to pay.  Should we wait to see how much we will have to pay and adjust our 2013 gain, or will we have to deduct the 2014 expenditure in 2014?  We are a cash basis taxpayer.

You need a better lawyer
It should be a 2014 adjustment unless you knew of it and were reasonably certain of the expense at end of 2013

Reasonably complicated area of law - much more at play - recapture of depreciation, did you make an overall gain, etc

You will likely wind up with loss in 2014 and gain in 2013

Don't you have a local cpa?

How much gain did you have?  

Tax Law (Questions About Taxes)

All Answers

Answers by Expert:

Ask Experts




Tax and general business including hospitality related (hotel mgmt degree and experience in industry prior to obtaining ms tax and cpa).


19 years cpa. ms tax. NOTE: My discussions are only a general information and do not constitute tax advise without entering into a specific agreement and executing an engagement letter; This free chat is nothing more than general information and should not be construed as tax advice nor does my response or replies imply an agreement to provide client specific advice or other guidance for purposes of avoiding IRS tax or penalties and should not be relied upon without your own validation and confirmation of the how the discussion may fit your facts... Not having all the facts and/or not having a direct client relationship prevents me from providing the most accurate replies as possible and I highly suggest using a local CPA to provide you with written advice and guidance. Taking matters into your own hands is much akin to trying to land an airplane without a license. It is easy to FLY a plane, but LANDING is when critical experience is key. In short, caveat emptor; do your homework and don't just rely on free chat board advice anywhere, anytime.

AICPA, CSCPA (Ct society), National Tax,

a bunch.

MS tax and other post graduate coursework

Awards and Honors
variety including Summa Cum Laude

Past/Present Clients
I don't disclose or kiss and tell

©2016 All rights reserved.