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Subject Author Date
Lost deposit (forfeited deposit) Peter 03-20-2007
Posted by Peter on March 20, 2007, 3:24 pm
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 I lost a deposit when trying to buy a house.
I called the irs and they informed me that the lost deposit
is not deducible because it is a personal loss.

What I don't understand is that the home owner kept this
deposit and can simply not claim this deposit as income.
The irs will never know since I can not deduct the loss.

Shouldn't the person getting the deposit have to claim this
as income?

Anybody know if this personal loss is really not deductible
some other way?

Thanks,
John

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Posted by Phoebe Roberts, EA on March 21, 2007, 1:47 pm
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 Peter wrote:

> What I don't understand is that the home owner kept this
> deposit and can simply not claim this deposit as income.
> The irs will never know since I can not deduct the loss.

The IRS wouldn't know it was income to them even if you did
deduct it.

> Shouldn't the person getting the deposit have to claim this
> as income?

Maybe. I don't know off the top of my head if it would
qualify as excludable gain from sale of a personal
residence, but my initial reaction is that it would. It's
not your business, in any case.

> Anybody know if this personal loss is really not deductible
> some other way?

Really not deductible. Sorry.

Phoebe :)

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Harlan Lunsford on March 21, 2007, 2:06 pm
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Peter wrote:

> I lost a deposit when trying to buy a house.
> I called the irs and they informed me that the lost deposit
> is not deducible because it is a personal loss.
>
> What I don't understand is that the home owner kept this
> deposit and can simply not claim this deposit as income.
> The irs will never know since I can not deduct the loss.
>
> Shouldn't the person getting the deposit have to claim this
> as income?

Exactly. It IS income to him, and he will report it on his
1040.

> Anybody know if this personal loss is really not deductible
> some other way?

True, for you it is a personal expenditure, and therefore not
deductible. Nowhere. Nohow. No way.

ChEAr$,
Harlan Lunsford, EA n LA

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Frederick Lorca on March 21, 2007, 2:06 pm
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> I lost a deposit when trying to buy a house.
> I called the irs and they informed me that the lost deposit
> is not deducible because it is a personal loss.
>
> What I don't understand is that the home owner kept this
> deposit and can simply not claim this deposit as income.
> The irs will never know since I can not deduct the loss.
>
> Shouldn't the person getting the deposit have to claim this
> as income?

The forfeited deposit is income to the home owner and a
personal, nondeductible loss to you.

Frederick Lorca

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Seth Breidbart on March 23, 2007, 6:12 am
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>> I lost a deposit when trying to buy a house.
>> I called the irs and they informed me that the lost deposit
>> is not deducible because it is a personal loss.
>>
>> What I don't understand is that the home owner kept this
>> deposit and can simply not claim this deposit as income.
>> The irs will never know since I can not deduct the loss.
>>
>> Shouldn't the person getting the deposit have to claim this
>> as income?

> The forfeited deposit is income to the home owner and a
> personal, nondeductible loss to you.

Is it income or part of the sale proceeds?

Seth

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

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