Level 3

Question

Client sold home in California and sold it before owning it for 2 years

Forum|Forum|5 years ago
April 28, 2021
5 replies
13 views

My client sold his home in California at a loss. His company reimbursed him for the loss and included it in his W2 income for 2020. He owned the house for less than 2 years so he is not eligible for home sale gain exclusion. Does the reimbursement create a gain at Fed or State level? My inclination is no as he is already being taxed on the reimbursement when it was included in his W2 income.

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IRonMaN

Level 15

He picked up W-2 income for what he was short so there is no gain to report on the sale.

Slava Ukraini!

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bill6Author

Level 3

Thanks IronMan . Is your reply contradictory to TaxGuyBill?

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TaxGuyBill

Level 15

Any bonus that his employer pays him does NOT change the calculation of gain/loss of the house.

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bill6Author

Level 3

Thanks TaxGuyBill. Is your reply contradictory to IronMan?

IRonMaN

Level 15

Same answer. He still has a loss on the sale and he has additional income reported on his W-2.

Slava Ukraini!

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bill6Author

Level 3

Thanks IronMan and TaxGuyBill. Are your replies contradictory to one another?

Just-Lisa-Now-

Intuit Community Champion

If there is a loss, they dont need the 121 exclusion.

If the employer compensated them on their W2, all income has been accounted for.

What is your question again?

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪

qbteachmt

Level 15

Nothing is contradictory. They don't Relate the way you are thinking they relate.

The Nice Employer justified giving the person a Bonus, likely because the job had something to do with the need to sell the house no matter the market.

That's the only way they relate.

Don't yell at us; we're volunteers

dkh

Level 15

You've said your client sold the home for a loss therefore there you don't need to be concerned about the home sale gain exclusion. The loss is not deductible.

The "reimbursement" is W2 income. As @qbteachmt pointed out - it's nothing more than an employer being kind with a bonus. Enter the W2 as you would any other W2.

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