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I made a big boo boo
Old 02-03-2007, 09:42 AM   #1
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I made a big boo boo

Hi tax experts on this forum,

I need some advice urgently. I do my taxes myself every year using Tax Cut but every year it seems to get a little more complicated since I do a bit of real estate investing. In 2004, I sold a three family house in which I occupied one of the units. The size of the entire house is appx. 4,500 sq. ft and I occupied about 2,700 sq ft. During the two years I owned the house, I allocated 2/3 of the house as rental and depreciated 2/3 for tax purposes. When I sold, the house, however, I excluded the entire gain because I mistakenly thought that since it was my primary residence, the gain was not taxable. I did file a form 4797 with my tax return declaring the 2/3 of the gain but claiming the entire amount of $63K as an exclusion.

In researching the tax treatment for a friend who has just sold a house similar to mine, I realized that I misinterpreted the tax code. Now, I am anxious because the IRS did not send back the return for me to correct and I am worried that when they do, I would have a tremendous liability plus penalty and interest. Will the fact that I filed the 4797 definitely result in an audit? Advice please since I've never had a situation where something like this has happened since I always ere on the side of caution.
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Re: I made a big boo boo
Old 02-03-2007, 10:14 AM   #2
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Re: I made a big boo boo

Just prepare an amended tax return to correct the mistake.
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Re: I made a big boo boo
Old 02-03-2007, 10:34 AM   #3
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Re: I made a big boo boo

Just to make sure you really made a mistake post a question on http://groups.google.com/group/misc....n&lr=&ie=UTF-8

Its a monitored board, many responders are tax professionals.
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Re: I made a big boo boo
Old 02-04-2007, 08:34 AM   #4
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Re: I made a big boo boo

Quote:
Originally Posted by Brat
Just to make sure you really made a mistake post a question on http://groups.google.com/group/misc....n&lr=&ie=UTF-8

Its a monitored board, many responders are tax professionals.
Or go to the "Fairmark Forum" which is a CPA run board.
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Re: I made a big boo boo
Old 02-04-2007, 08:42 AM   #5
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Re: I made a big boo boo

Unfortunately, he did make a mistake so he needs to file an amended return.
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