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Schedule C and Loss of property

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Level 3

On schedule what would be the best way to report loss of rental property outside of the client's resident state due to a lien by HOA?

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3 Replies 3
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Level 3

Generally, a lien doesn't constitute a loss of the underlying property. The taxpayer still owns it, they just have to clear the lien before they can sell it. 

I drive a minivan.
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Level 3

Yes. However, the client loses the property because he wasn't aware of the lien and hence, the court made HOA the winner and that's how he lost the property.

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Level 11
Level 11

You treat it as a sale, and fill out the asset worksheet. See this link for more info.

https://www.irs.gov/pub/irs-pdf/p544.pdf