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16 September, 17:58

A married couple abandoned their principal residence in May. They had purchased the house five years ago for $350,000. The house had a current fair market value of $300,000. What is the maximum loss, if any, that they are allowed to deduct on the current-year's tax return for the abandoned property?

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  1. 16 September, 21:49
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    Answer: $0

    Explanation: As stated in the internal Revenue Code (IRC) as regards the limitations on losses of individuals. Summarily, Losses can only be deducted from tax returns if:

    1. Loss is incurred in a trade or business.

    2. Loss arising from a profit oriented transaction.

    3. Loss arising from theft, casualty or Natural disaster.

    However, Loss in the question above can be attributed to abandonment arising from the couple's personal decision which is not covered jn the reasons for loss deduction from tax income stated in the IRC.
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