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Posts: 63
Reply with quote  #1 

I have not yet done this, but this intrigues me.

Basically, tenant is eviced and landlord loses a months rent.  Landlord files that months rent as income, then files as a loss. 

I'm thinking I can even tip the IRS that the tenant has income of the lost months rent if they bail and disappear.



Posts: 507
Reply with quote  #2 
It depends on how your accounting works. If you are cash basis, then it was never income because it was never paid and therefore it wasn't an expense either. If you are accrual basis, then the unpaid month counts as rent income and you can claim the bad debt expense since it was never paid (the expense counters the income, so there is no net change to your income or taxes). 

You can't "tip" the IRS about the tenant's income of the unpaid month since the tenant didn't have any income. In order to tell the IRS about someone's income, you would need to actually pay them money and then send them a 1099 (which is also sent to the IRS along with a 1096). 
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