Can I take a tax loss on this property???

[Ken Sanders]

I purchased a worthless vacant residential lot over a year ago with the intent to flip or develop it that I now can't get rid of. The property was purchased and remains in my personal name. I was thinking of transferring the property into an LLC, stop paying the taxes on it, let it go to the County tax sale, and then, [hopefully] take a tax loss on it.

My question is, would I be able to count this as a long term capital loss on my federal income taxes? If so, when does my loss for tax purposes become official? When I sell it to an LLC for $1? When it's sold at the County tax sale? I should note that I own the lot clear & free.

Any potential pitfalls with this plan? I've exhausted all other options.

[Brent Coombs]

@Ken Sanders, my nagging instincts tell me that you'd need to be "selling" it to to the LLC for what it owes you, rather than $1.00 (else YOUR losses would be immediately apparent to the IRS and everyone else, right*?) So then, it would be the LLC that would go about the nefarious business you're contemplating! I don't know if you've been reading too many of the exploits of a certain President-elect (who shall remain unnamed) in coming to the conclusion that you can be "guilty as hell"... and still get REWARDED for it, but, such conniving doesn't sit well with me...

* (But I'm not used to thinking about skirting the rules, so I my "instincts" may be wrong).