I invested in bare land to develop. I have a full time job. I had to give back some of my lots and I am looking at substantial debt forgiveness. Can my debt be considered qualified real property business indebtedness which would allow me to substantially lower my reported income using form 982?

ANSWER

The BIDaWIZ Team's Answer:

If you review the Internal Revenue Code Section 108 and IRS Publication 468, there is information regarding qualified real property indebtedness. Based on the facts and circumstances you've provided, investing in vacant land lots in itself would not meet all of the requirements necessary to exclude the debt. You are primarily missing the condition for running an active trade or business associated with the real property.