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William Perez

What to Do With Form 1099-A?

By February 27, 2010

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When a house is foreclosed upon by the bank, the owners typically receive Form 1099-A from the lender showing several pieces of relevant information. The information on Form 1099-A will likely be needed to report the foreclosure on your tax return. A foreclosure is treated as the sale of property, and the former property owner will need to calculate their gain or loss on the property. But unlike a normal sale, there's no "selling price," and this is where the Form 1099-A comes into play. What to do with the information found on Form 1099-A has been asked by a number of readers, including "IcelandorBust," who posted this query on the message boards:

"Our home was foreclosed on in July 2009. The bank sold it to a new owner in November 2009. We received a 1099-A in January. We have not received a 1099-C. I have been unable to find a concrete answer as to what to do with the 1099-A."

Under the rules for calculating the tax consequences of a foreclosure, taxpayers will need to report the foreclosure just like it were a sale of the property. And to properly report this, you'll need to know the selling date and selling price of the property. Form 1099-A provides you with the date of sale and the "selling price" of the property, which is half the information you need to report the sale of the foreclosed property on your tax return. The other half of the information you need is the purchase date and purchase price; and that information will be found in your escrow statements from when the property was purchased.

Figuring out the "selling price" of the property is a bit complicated. The answer depends on the type of loan. Taxpayers will utilize either the fair market value of the property or the outstanding loan balance on the property for the selling price. Both of these figures are reported on Form 1099-A. The outstanding loan balance is found in Box 2; the property's fair market value is found in Box 4. The date of the foreclosure is indicated in Box 1, and this will be used as the date the property was disposed of (that is, the "sale date"). Taxpayers will also need to know if the loan was a recourse or a non-recourse loan; the loan was probably a recourse loan if the bank has checked "yes" in Box 5 which asks "Was borrower personally liable for repayment of the debt?"

People might receive multiple Forms 1099-A (one from each lender) for a single property. People might also receive Form 1099-C instead of Form 1099-A if the lender both foreclosed on the property and canceled any mortgage debt for which the borrower was personally liable.

Gain or loss is reported on Schedule D for homes that were personal residences. As a reminder, the IRS does not allow people to claim a loss on personal residences. Any gain (and I have seen situations where a foreclosure results in gain being reported) on personal residences can be offset by the capital gains exclusion for a main home.

So what do you do with Form 1099-A, exactly? First, if the foreclosed property was your personal residence, the foreclosure will be reported on Schedule D. You'll use the date of the foreclosure (found in box 1 of the 1099-A) as your date of sale. You'll need to indicate the selling price. This will be either the amount in box 2 or the amount in box 4. Which figure you'll use depends on the lending laws in the state where the property was located. You'll also need to indicate your purchase price or cost basis in the property. That information you should have in your records, usually from the HUD-1 closing statement from when you purchased the property. The difference between the selling price and your cost basis will result in your gain or loss. Gains are taxable, losses personal residences are not tax-deductible.

If the property was a rental, you'll report the same information as above, but you'll use Form 4797. I advise people who have foreclosed rental properties to seek assistance from a tax professional as there are additional factors to take into consideration, such as recapture of depreciation deductions, passive activity loss carryovers, and reporting any final rental income and expenses.

One final tip: the difference between the box 2 and box 4 amounts is not your taxable income or gain on the foreclosure. State law determines whether the amount in box 2 or the amount in box 4 is used as your selling price, and your gain or loss is computed with respect to your cost basis in the property. By itself, Form 1099-A reports only half the information you need to report the foreclosure on your tax return. You will also need information from your own records.

Comments
March 6, 2010 at 6:07 pm
(1) Brett says:

Can you address the cancellation of debt implications of the 1099-A? My understanding is that you have ordinary income to the extent that the loan forgiven (Box 2) exceeds the FMV of property (Box 4). If the 1099 is for your principal residence, you may be able to exclude the cancellation of debt income.

March 7, 2010 at 10:39 pm
(2) Amy says:

You can also be relieved of indebitedness if you were insolvent before the debt was cancelled.

March 4, 2011 at 1:29 pm
(3) mary says:

times share: we received 1099-a form for abandonment of property( but there is no property–just timeshare). we are insolvent. who sends us 1099-c form and when do we get it.? will the timeshare amount be forgiven–and are taxes due? please exlain.

March 29, 2011 at 12:10 am
(4) Kathryn Simmons says:

I am in the same situation and would like to know how to handle the 1099a. Thanks.

March 13, 2010 at 4:54 pm
(5) Sheri Thomas says:

What if the home was a rental property?
Purchase price $82,755
Accumulated depreciation $4,914

Box 2 Balance of Outstanding Debt $64,000
Box 4 FMV $65,000

Because this was business property, can a loss be claimed? How is this situation handled?

Thanks.

March 21, 2010 at 8:44 am
(6) Pat says:

Am I still responsible for this 1099a if the social security number listed isn’t mine but my deseased husband’s?

My husband had put a house under our name for his kids, (my step kids) I had a land contract with them, after he died they walked out on the house and it went to foreclosure. the amount owed was $197,000 and it sold for @117,000.

I had a lease showing that I lived there for 2 of the last 5 years, but actuall I didn’t. I have always filed that my house I live in is my principal residence. How strict are they on this debt forgiveness? Would that lease get me out of paying $$$$? Or am I going to be stuck with the $80,000 as if it was income?

March 29, 2010 at 5:51 pm
(7) Tom says:

Goshhh,you wrote what to do with the 1099-A topic but all you do is describe the the form. “As a reminder, the IRS does not allow people to claim a loss on personal residences.” So where the heck does it go?

September 21, 2011 at 4:28 pm
(8) Mary says:

You are out of luck. No losses on personal residences or
personal preperty are allowed. ONLY GAINS.

April 9, 2010 at 12:38 pm
(9) Kevin says:

If the FMV is greater than the balance of the debt. You would have a loss. Report loss on schedule D. If the 1099-A is derived from a personal residence then mark the loss on Sch D (last box on same line reporting) as personal and do not carry the loss to the front page of the 1040. Your reporting the transaction but unable to take the deduction.

January 6, 2011 at 4:19 pm
(10) Carmello says:

My house was forclosed in October…..I still haven’t receveid a 1099A….when I do my taxes this month should I try and find it…..or do my taxes and wait for it to come?

January 14, 2011 at 9:50 pm
(11) Jo says:

Carmello-
The lender is required to send your 1099 before the end of January, so sit tight and wait to receive it. If you file your taxes without reporting it, you could be in trouble with the IRS.

I just received mine today (I short saled in 2010).

January 14, 2011 at 5:14 pm
(12) me says:
January 27, 2011 at 9:08 am
(13) Nice says:

Good link ME – Everyone – this is the best article I’ve read out there on this subject.
READ IT

January 15, 2011 at 6:54 pm
(14) Evelyn says:

My Fathers House was Forclosed April 2010, does the 1099A mean that he will have to pay some sort of mount because of the forclosure like a penalty? i have heard that some people that receive the 1099a form end up having to pay, if so how can we determine before filing our taxes?

January 16, 2011 at 2:25 pm
(15) Donald 719 says:

my home was foreclosed and sold do to a chapter 13 B/K … on my 1099-A , the principal outstanding is in box 2 is $ 140,416.00 the fair market value in box 4 is $ 67,000. can i claim a loss on my taxes with this form ?

January 19, 2011 at 4:27 pm
(16) Isabella says:

Hello, I live in Ca. My home was foreclosed on in Oct 2010. We filed bankruptcy in 2009 but tried to keep our home. I just received a 1099-A in box 2 Balance of principal it says $239,000 the FMV in box 4 says $269,000. Does this mean we have 30k in capital gain. We lived there for 5 years. Since this was pre bankruptcy debt are we responsible for the taxes?

January 27, 2011 at 8:22 pm
(17) lenore says:

Hello Isabella, Can you please tell me if you got anymore help/information with your problem, My issue is the same as yours and I am getting nowhere. Thanks

January 27, 2011 at 8:54 pm
(18) William Perez says:

Isabella and Lenore, the Form 1099-A provides information you’ll need when reporting the “sale” of your home. Foreclosures and short sales are considered sales for tax reporting purposes. The selling price will be either the outstanding loan balance immediately before the foreclosure minus any mortgage debt for which you remain personally liable for repayment (which is generally* the amount found in Box 2); or the fair market value of the property (which is generally* the amount found in Box 4).

Which figure you use depends on whether your loan is a recourse or a non-recourse loan. In California, any mortgage loan which is the used to purchase the property is a non-recourse loan (these are also called money purchase loans). If the money purchase loan (the “original” loans on the property, so to speak) are refinanced, they become recourse loans. Any home equity loans or lines of credit are generally recourse loans as well. (These rules applies in California, I’m not sure what other state rules are on this topic.)

If the loan(s) are non-recourse, then you will use the lower of the two figures as the selling price.
If the loan(s) are recourse, then you will use the outstanding loan balance (the box 2 figure).

If there are multiple loans, you will need to add up the figures to report the sale.

Your gain or loss depends on the difference between the selling price and your cost in the house. Thus, the difference between the box 2 and box 4 amounts does not equal your gain.

*Another word of caution, lenders do not always report accurate amounts on the 1099-A, which is why I said “generally” above.

You can read more details in my article on foreclosures.

Getting the numbers right for tax reporting purposes very often requires reading through the original loan documents, and tracing any refinances, in order to figure out the both the capital gain (if any, but generally not likely) and any canceled debt income. Accordingly this is a good project to send to an experienced tax professional.

February 23, 2011 at 3:40 pm
(19) Amy says:

Hi William,

In your response to Isabel and Leonor you say this:…If the loan(s) are non-recourse, then you will use the lower of the two figures as the selling price. If the loan(s) are recourse, then you will use the outstanding loan balance (the box 2 figure)

I went to see your article about foreclosures and there you say the contrary, now I am totally confused:

Determining Gain or Loss on a Foreclosure
For recourse loans, the figure used as the selling price is the lower of the following two amounts:

* the outstanding loan balance immediately before the foreclosure minus any debt for which the borrower remains personally liable after the foreclosure; or
* the fair market value of the property being foreclosed.

For non-recourse loans, the figure used as the selling price is the outstanding loan balance immediately before the foreclosure. You are considered as selling the house to the lender for full consideration of the outstanding debt.

February 17, 2011 at 1:34 pm
(20) JB says:

Isabella,
My understanding of the matter is that you are reading that incorrectly. If the FMV is higher than what you owe, that should be a loss “in theory”. You have to go back to what you originally paid for the property. If you ORIGINALLY paid say, $189,000…then box 2 is basically like saying you sold your property for $239,000…which would net you a $50,000 gain, which should be excludable by the primary residence fact…
Go back and REREAD this article, all the information is there to tell you where to start the process and how to calculate it.

January 27, 2011 at 10:59 am
(21) Ducky says:

This whole thing is horrible. I have been researching for days, and currently on hold for the IRS for 30 minutes now. We have spoke to an tax attorney, and accountant and the mortgage company that foreclosed on the property. SO..we got a 1099-A, and by my understanding this means the mortgage company can come back to get payment on the balance. What the accountant & tax attorney said matched, but what the mortgage company said didn’t and when I challenged her, she hung up on me. I am getting no where. There is so much conflict, I have even read the IRS publication 523. What doesnt make sense to me is that BOTH 1099-C and 1099-A must be reported on the same line on the 1040, so we pay tax on it either way, wouldnt the 1099-C be best then, since that means there is no recourse for collection? If I’m gonna pay taxes on $60k, then I don’t really see how they can collect the 60K cause then is isnt income. I hope someonce can make sense of this. I’ll post what the IRS agent says, if they answer before my phone dies.

January 27, 2011 at 12:48 pm
(22) Ducky says:

ok…SO Irs agent…was VERY helpful. She said the mortgage companies are mixing up the forms. They are sending 1099-A instead of C’s….so make sure your mortgage company is forgiving the debt (by Calling). Then see if you can get IRS forgiveness by filling out page 6 worksheet in publication 4681 (link below)
http://www.irs.gov/pub/irs-pdf/p4681.pdf
ok…if the time you lost your house, your debt was higher than your current value (your assets NOW) then you can get debt forgiveness. She also said that Turbotax will do this properly if you go step by step and answer yes when it comes to the question “Did you sell a house this year” tax software is great to use in these situations.

Now for the question, did I have to file this as income this year?…NO, but since the mortgage companies are sending the wrong forms out you need to call and have them tell you whether they have forgiven the debt. If they did, you might as well put it all behind you and move forward. Use a tax software to make sure you get the proper deductions. (sorry accountants.. I know you need work too) But in my case, we have truly lost everything, and paying for tax preperation is NOT a possibility.

January 27, 2011 at 8:35 pm
(23) Melissa says:

I just received a 1099-A and I am lost. We were notified of foreclosure and that the property was up for sale. It did not sell and we still live in the home. We also received notification expiration of Home Owners insurance that mortgage company had and was instructed that if we did not put insurance on the home, they would place insurance on it again. Since we still live in the home, I am totally confused. What’s the difference between 1099-A and 1099-C, we don’t have a 1099-C? Do you know which one is better?

January 29, 2011 at 4:51 pm
(24) Ed says:

I have an issue with a 1099-a being sent to one person who was insolvent at the time of foreclosure but the 1099-a had a 2nd name on the form that wasn’t. How would that work out? It was a father/Son situation in which the Father had co-signed for a refinance but the Father been on the deed from the beginning since he sold it to his son. There is a difference of 92k between the amount owed and the estimated value on line 4. What is the end result?

January 30, 2011 at 12:45 pm
(25) Robert says:

I recieved a 1099-A my out standing balance is $108,000 and the FMV is $128,000 box 5 marked not personaly liable. This was a rental house I gave up in a bankrupt I have read for 2 days and I am lost because every thing refers to if it is your home not a rental. PLEASE HELP I AM LOST

January 31, 2011 at 1:24 pm
(26) Kevin says:

I already filed my taxes and recived a check. I just recived a 1099a i never new that i would recive such a form what kind of trouble could i be in for with the irs?

February 1, 2011 at 2:43 pm
(27) Bill says:

I have the same problem. I just rec’d my form today…not knowing I was going to get one and already filed my taxes. I have read that the IRS forgives the amount…..I hope so the difference is about $90,000????

February 3, 2011 at 1:33 pm
(28) Ang says:

Same situation for me…. have you guys found out any further information- do we need to amend?

February 23, 2011 at 4:57 pm
(29) ROSE says:

Same thing with me. Did you get an answer?

January 31, 2011 at 4:35 pm
(30) Keri says:

so I received a 1099A the balance in box 2 is 270,115 and the FMV in box 4 is 192,000. box 5 is checked yes does this mean I have to pay or do I have a loss???

January 31, 2011 at 4:42 pm
(31) Zak says:

Ok. I just need a simple “Good” or “Bad”.
1099-A Form
Balance of Principal Outstanding: Box 2 – $43,904.20
Fair Market Value of Property: Box 4 – $52,795.96
Personally Liable: Box 5 – Yes

Good or Bad?

January 31, 2011 at 4:49 pm
(32) Don says:

I was told by my lawyer that if I filed Bankruptcy befoe the house was foreclosed on that there would be not taxes owed is this true or do I have to find a lawyer to sue this lawyer…

February 1, 2011 at 3:20 pm
(33) Shanna says:

I seem to be in the same boat as most of you. I just got off the phone with the IRS and they were no help at all, in fact the guy was a total jerk to me and told me to call the mortgage company. It really made me angry that he was treating me so poorly. I told him sorry that I called the IRS to make sure I received the correct form to complete my taxes. He again told me to contact the mortgage company….funny you think the IRS would give you a straight yes or no answer, anyway…..

My situation in a nutshell filed chapter 7 bankruptcy June 2009, received discharge Sept 2009. Home was not reinstated and discharged. Home foreclosed Nov. 2010 I received a 1099A in the mail yesterday from the mortgage company. Here is the info on the form.

Box 2 117,000
Box 4 102,642.94
Box 5 checked yes

I am a bit confused, is this the correct form? Shouldn’t of I received a 1099C, since the debt should of been canceled in bankruptcy?

Any help would be greatly appreciated.

February 2, 2011 at 12:47 pm
(34) Ed says:

I am in the same boat, filed chapter 7 discharged. Then got a 1099a the following year. Can’t get a anawner from anyone. Let me know what you find out. Thanks

February 2, 2011 at 10:22 am
(35) bkinblk999 says:

Alot of comments…..No answers!!!

February 2, 2011 at 6:24 pm
(36) HOPE4ALL says:

Here is what I found out…Okay so I contacted the lender on the 1099-a to see if they knew anything. They were kinda lost. They didn’t even know they had sent me a 1099-a!! LOL! Anyways they are never allowed to give tax information out (I worked in mortgage and this is very true). BUT they could see my debt had been forgiven Principal Value says $0.00. I went to that form “Ducky” mentions and filled it out and now I wonder what I need to do with it?? After punching in those #’s on form 6 we are insolvent. I have a tax lady but want to make sure what to bring to her- she is so busy at this time of the year I don’t want to bug her if u guys know anything! Thanks for your help Ducky!!

February 3, 2011 at 1:50 pm
(37) Juli says:

1099A
We just received this form, but filed bankruptcy when we
surrendered this property. We were discharged.
i don’t understand why we received this 1099a
like so many others you hear om the news we were upside down.
Are there areas on the tax forms for bankruptcy?

Any comments would be appreciated

February 3, 2011 at 2:27 pm
(38) Mr. Wis Co says:

On rental prop. On 06/2009 Chapter 7 released & surrendered prop to lender Today received 1099-A box 1. 05/03/2010, box 2. $280,887, box 4. $321,482, box 5. 5 No. What is my tax consequence if any. Please advise. Thanks.

February 3, 2011 at 3:43 pm
(39) JulieS says:

Ok. We all seem to be in the same situation! We also received a 1099A and have no idea what the consequences will be. I wish you all luck. Ours is owed 298,000 and FMV 250,000.. Hope someone is looking down on us tonight when we meet with the tax professional… ughhhh so scared!

Best of luck to all of you! I hope for financial strength in the future for u all!

February 26, 2011 at 7:45 pm
(40) Lori says:

I’m going to respond to this one but it is for all of you. I’m in the same boat. Received one today: February 26, go figure. So much for January 31. Same scenerio. My guess is: we are all going to become victims of some evil scheme for these banks to try and recover or punish us for their losses. What they have done, is put the burden of proof on us instead of filing the correct information. One good thing I guess is the IRS is going to be flooded with this problem and hopefully Obama will get wind of it and these mortgage companies and their servicing companies can deal with it. I think it is a ploy to make us all sweat. How could this happen to so many of us especially in light of Debt Forgiveness Legislation in 2007. Ridiculous!!! Just additional burdens to all of us. I’m one of the big fishes, however since my FMV is in excess of 585,000 and I filed bankruptcy to protect myself of it. Hopefully you all have good tax accountants because they can get the answers for it. I was discharged in the bankruptcy in 2009 but my husband was not. Also, in box 1 it shows 2/17/2010. The irony of this is that someone else took possession in 12/2009: a bankruptcy attorney and his wife. In our court documents, it indicates that the bank would not come after us and forgives the debt: in our actual documents. Deed passed in December to new owners. I called the servicing company on behalf of Wells Fargo and they virtually were less than knowledgable and stand by their possitions. My advice: file insolvency if there is no bankruptcy. File forgiveness under bankruptcy if you filed bankruptcy. Get good tax accountant.

February 3, 2011 at 8:34 pm
(41) Frog says:

We also filed bankruptcy, forclosed and received the 1099a. I have called the mortgage company, who did not even realize that we filed bk, nor did they know that they sold the property last summer! They said not to worry, they are not attempting to get money from us. My attny said not to worry. So why am I so worried??
Also, they list the FMV WAY above what what we owed and what it actually sold for. I have short sale docs to prove that we were upside down.

February 5, 2011 at 5:41 pm
(42) kbushnell2 says:

I just receivd a 1099-A and filed my taxes in January. My situation is a bit different from others here. This is for a “Vacation Ownership Interest” from Wyndham that I signed a deed in lieu of foreclosure on. I have no clue what to do with this thing. Box 2 has a principal outstanding of $68,441.19 and Box 4 has FMV of $78,747.00. What am I supposed to do with it?

February 6, 2011 at 10:58 pm
(43) dakina says:

I am in the same boat. I received this 1099-A but I cannot find where it goes on my taxes. I’ve been using Turbotax(not completed) and it says that if it isnt your primary residence, then you don’t enter the information. You keep the 1099A and wait ti see if you receive a 1099C(forgiven debt). I am still confused. Should I continue with Turbotax, or should I let someone else more qualified than myself do my taxes?

February 6, 2011 at 2:36 pm
(44) janet preble says:

We each received a 1099a.We do not know what to do with it. Federal nat.mortg.assn. gave us a warrenty deed in 2009. We got release of les pend,satisfaction of mortg.dismissal from records from bac. now bac countrywide says they foreclosed. What do I owe on 1099A.It does not say .The mortgage is more than the fmv.I am so confused.We had to let house go as I had to quit work to care for my husband who is in end stages of Lung cancer. i am 24 hour caregiver. Could I file a insolvency as I was broke when I started dealing with bank.

February 7, 2011 at 8:41 pm
(45) Mary says:

Same situation as so many others – received a 1099-a and am trying to do my taxes on turbo tax, but am told that I don’t report a 1099a? But to be sure to report the sale of my home. We owed about $25,000 less than what they consider the FMV, so am I correct in assuming the difference is considered a gain? After all we went through dealing with the mortgage company and losing our home due to my husband’s unemployment, is it seriously right that we are considered to have all this as “income”? that can’t possibly be right! I don’k know how to report this on my taxes and it’s really frustrating. Help!

February 10, 2011 at 2:10 am
(46) Theresa says:

Mary, your situation sounds exactly like mine. After everything we’ve been through, I really don’t want to deal with this as well. I’ve googled this subject and found so many different answers, I guess I’m going to call my BK lawyer in the morning and see what he says. I dunno. I will say that I’ve seen posts that specifically say that if the FMV is a larger number than the principal balance, that is NOT a gain. But I can see how it could be interpreted either way.

February 8, 2011 at 2:07 am
(47) Brigette says:

Wow, this is confusiing………….a lot like others: A rental we had went into foreclosure 10/2010. Today we received a 1099-A. Box 2: $208,000 Box 4: $67,500.00 Box 5: Yes.
Where do they come up with the FMV????? The mortgage company (GMC) has it currently listed for $140,000. So what if it sells for more then the FMV?? Will the taxes change?? I haven’t started my Turbo tax yet (starting tomorrow actually), but am worried about others saying it wont allow the 1099-A info to be entered??? then what??
Someone, PLEASE give us confused lost people some help and answers!! We all have already lost so much during this crazy economic time, are they really going to kick up while we are down????Thanks!!

February 9, 2011 at 5:10 pm
(48) LeeS says:

Ducky!

Thank you Thank you Thank you Thank you Thank you.
I followed the same steps you did. I called the IRS, spoke with a very nice woman, who advised me to fill out the 982 form. She even took the time to help me fill it out.

OMG! I can breathe again. Nothing like the fear of owing tax on $250K all at once.

Thank you for the advice!

February 16, 2011 at 9:46 pm
(49) Richie Not Rich says:

I recieved a 1099a for a rental property in Florida.

Box 2 has the principle as 99000

Box 4 FMV 110000

BOX 5 is checked that i am not liable

Does this mean that they will not come after me since the FMV was listed higher than the debt owed in box 2

February 23, 2011 at 4:21 pm
(50) Amy says:

They won’t come after you because you are not owing any money to them, indeed the bank did a profit selling your home in foreclosure ($11000)
Now for the IRS is like you sold the house to the bank so you need to pay capital gain taxes because it’s a rental property. If you can’t pay the taxes you can claim insolvency.

February 18, 2011 at 6:44 pm
(51) melissa says:

we had a lake condo that was forclosed on 4/29/10. 1099A shows box 2 principal balance as 260,000. box 4 FMV is 345,000. Box 5 checked yes. Called and found out the property was purchased by Freddie Mac for 114,000. We only received the 1099A – what the heck does this mean for our taxes???

February 23, 2011 at 4:53 pm
(52) Amy says:

I called the IRS and here is what I understood:

A 1099-A is only used in filing an income tax return when the FMV is higher than the loan balance. In that case you need to file Schedule D reporting the gain, if the property was your primary residence or you filed for bankrupcy or you are insolvent then you don’t have to pay capital gain taxes.

If the loan balance is higher than the FMV you need to ask or wait for the 1099C form. Once you receive that form you have to complete the form 982 ( cancellation of debt income, section 1e and 2) only if the property was your primary residence.

If you receive a 1099-A, you can still receive a 1099-C later.
Basically you probably won’t be getting a 1099-C for this tax year, so you would likely get a 1099-C for the next tax year, and would have to declare the Cancellation of debt income then. Bottom line: a 1099 A with a FMV higher needs to be reported as gain but a 1099 A with a FMV lower is useless, nothing to be done until you get your 1099C (call the lender or just wait)

February 23, 2011 at 9:35 pm
(53) BSchieberl says:

I called my lender yesterday and they told me I will NOT be receiving a 1099c. So now what? Can’t seem to do the Turbotax with what I got (1099a). Very confusing. Also, I think this means they can still come after us for the loan amount since debt is not being cancelled. So double wammy.
I think we all need more answers!

February 25, 2011 at 11:01 pm
(54) Kris says:

I’ve already filed and got this 1099A form later. It was post marked 1/31/11 but the postal service must have lost it because I didn’t get it until two weeks ago.

Anyhow, I decided to jump on H&R Blocks filing and attempt to amend my filing but they do not list a 1099A form as being an ‘source of income’ so there’s nowhere to add the information from my 1099A.

I don’t want any problems with the government, when as mentioned above it doesn’t seem that any of the tax software programs (tax cut, turbotax, nor H&R blocks own software) have any place to list the information from that form.

February 26, 2011 at 9:14 pm
(55) Lori says:

I called my lender in response to a letter with proposed address change that I did not make. The letter states a change of address as requested by me. When I called about it, I was informed that they were attempting to send me a 1099: I asked why? I told them I was discharged in bankruptcy in May of 2009, the deed on my home transferred in December of 2009 to another party and the foreclosing attorney listed on court documents that the debt will not be attempted to be collected (the amount forgiven). When I spoke to the mortgage servicing company which handles the loan for the bank, they informed me that they still could come after me for the remaining balance. When I told them they were in violation of my bankruptcy rights, they claimed they did not show the bankruptcy was final; this is February 23 people. For me, this started in 2007: the banks started foreclosure then. It took until May of 2009 for them to send notice of sheriff sale which was in November of 2009. We vacated so we weren’t pyhsically removed. We moved out of state because my husband lost his job of 26 years and thats where employment was. By the time it was said and done there was a balance owing of 531,740 which included deficiency mortgage from a default rate increase, attorneys fees, and the like. I guess that was to our advantage: the higher the amount owing and fair market value are key. Our FMV which was far from the truth is showing 585,000: ironically, the banks and/or REO appraised it at a little over 300,000. It subsequently sold for about that amount. I was informed that I would receive a 1099 with these values that I stated. I have not yet received it. Something seems to be shady about this process. A debt relief act is put in place to protect us from the abuses of the banking industries and it seems to me they have found a way around it: the good thing is, its apparent that it is happening to many of us.

February 28, 2011 at 5:46 pm
(56) james says:

We had a time share that we lost due to nonpayment so we recieved form 1099A The principal bal is same as fmv so how do we treat it on our 1040 form

February 28, 2011 at 7:30 pm
(57) Ratzo says:

Ducky you have been a wealthy of information. I never got either form. And I can’t even get a person on the phone in the mtg dept at US Bank I have been trying for days. But does that sound like anything unusual.

March 3, 2011 at 1:02 am
(58) confused says:

I recieved a 1099 a it shows box 2 420,000 and Box 4 459,000 the FMV. checked that I am liable. if was forclosed on 2/2009. The bank sold the home for 420,000 on 5/2009. If the bank could only get that were did they find the FMV should it be the 420,000 they sold it for? when I filed chapter 7in 2008 it was detirmend the the house was valued around 400,000which was less than we currently owed. So do I have to use the FMV that these Lenders report?

March 8, 2011 at 5:34 am
(59) William Perez says:

You do not have to use the bank’s fair market value if you can demonstrate that the property had a different fair market value, for example if you have an appraisal report date very close to the foreclosure date. For many taxpayers, however, the fair market value shown on Form 1099-A is the typically the best available documentation regarding the property’s value.

March 6, 2011 at 10:09 am
(60) Rno says:

okay, Need to do taxes. Foreclosed in 2010. Did not received any 1099s statements. Called lender and stated they did not report anything. Had cash for keys done and I from what I have read, I have a recourse loan (since I refinanced 2 years before forclosure – I live in nonrecourse state) I am at a lost. Where can I start? Call IRS phoneline and stated to call lender. Seems like I am in a catch 22 limbo. Need directions.

March 9, 2011 at 2:48 am
(61) Gregski says:

Wow, what a great way of saying a lot and not telling us what to do with this form. TurboTax asks for 1099-C and advises us to consult a professional regarding 1099-A like we can afford a professional after we just lost a property to a foreclosure, get real people.

March 14, 2011 at 9:35 pm
(62) RH says:

i received 1099-A on 1-20-11 as most everyone else here.
Balance 387,935.00
FMV 509,153.00
Now get this in, Oct of 2010, the Lender calls me on a Friday evening an offers to reduce the principal to 200,000.00 if I start to make payments again. I explain that being in the industry i knew the value to be more around 150,000.00.
We say goodbye, i get the 1099-A. What to do? Am i in good situation or bad? It definitely stinks either way.

Additionally, weren’t all these banks compensated for default mortgages through the TARP money? Aren’t they double dipping by coming after us?

March 15, 2011 at 8:48 am
(63) Micah says:

If I receive a 1099-A under my social security number, but the property was part of my business (an LLC that rents properties) where do I report the foreclosure? Can I report it under my business even though the 1099-A has my social security#, instead of my EIN?
Help!!!

March 16, 2011 at 1:11 pm
(64) TurboTax says:

here it is short and sweet – according to TurboTax

If you receive a 1099-A because you have abandoned personal property, such as a car, you don’t need to report it in your return.

Keep this form for your records in case you get a 1099-C that indicates the debt has actually been forgiven.

http://turbotax.intuit.com/support/iq/Less-Common-Income/Information-about-Form-1099-A/GEN12256.html

March 23, 2011 at 4:40 pm
(65) Loughmiller says:

We have the same problem as everybody above, but my husband had filed bankruptcy in 2008 while he was still married to his ex. We recieved a mortgage interest statement for 2009 with all zeros and then a 1099-a this year box 2 90,051.49, box 4 115,789.76 and box 5 yes…. not sure what to do. We will try “Ducky’s” suggestion.

March 24, 2011 at 7:38 pm
(66) Polly says:

Should I still be paying my lender if I received a 1099-A?

March 31, 2011 at 11:51 am
(67) Sony says:

I just received 1099 A and it goes like this… date of sale = 1/29/2010. box 1= knowledge of abandonment …Box 2 = $357000.00 Box 4 (FMV)= $407000.00 BOx5= Borrower was personally liable for the debt yes is checked. I don’t know how to deal with this…here is more info…I bought this house in 2001 and lived in this ever since…never rented it out….Purchase price in 2001 was $232000.00. It was foreclosed on Jan 29 2010. Nobody bid on it at the trustee sale and it became bank property and they sold it in july 2010 for $128000.00 how would i file tax on this and how do i calculate gain or losses and if this make me qualify for forgiveness and or capitol gain thing…..Please advice need help….thx
Sony please reach me at sony209@yahoo.com

April 7, 2011 at 9:19 pm
(68) Wendy says:

Well beat this: we just got our form TODAY. 3 months past when we were supposed to and of course we’ve already done our taxes! And there’s no way in heck the FMV is what they say it is. That stupid house is on the market right now for $100,000 less than that ridiculous FMV. Now what?? Grrr….

April 15, 2011 at 12:50 pm
(69) rick mozdzier says:

how can banks give you 1099 a giving correct principal balance and than mark fair market value in box 4 same as principal and than sell the property 3 months later for 200,000 less and the foreclosed owner has to use the inflated high number in box 4 for tax liabilities,this doesnt seem fair.

April 16, 2011 at 6:57 pm
(70) Patty says:

OK, like some of you I received a 1099A, lender date 3/22/10, balance outstanding 189,423, FMV 36,000, Yes for liable. This was a family member’s home who bought it in 2000 for 75K. Then to help them they signed over the deed to me (my credit was better than theres) to refinance at 130k in 2003, then I helped them again to refinance to do home improvements and payoff debt 180,500 in 2005, all hoping they would get the house back. Then finally one last refinance 190,950 in 2007. Well they could not keep up with the mortgage and I could not pay two mortgages so it foreclosure and I decided to file chapter 7 on it. HOW can I figure out how to do all this on Turbo Tax! Do I have to pay Federal tax? My BK was a couple weeks ago and it is left open until I send them this paperwork because we thought I was going to have a refund and they were going to take it of course but I think I am going to owe thousands-PLEASE HELP ME figure out which forms on turbo tax to complete. Do you know if all this can me included in the chapter 7? THANK YOU

April 16, 2011 at 10:21 pm
(71) William Perez says:

Patty, indeed TurboTax is not much help when it comes to foreclosures. Basically you will need to do some analysis to arrive at (a) your selling price amount, and (b) your cost basis amount. You will then put these numbers into TurboTax to calculate your tax (if any).

Before you begin your analysis, you will need to have several pieces of information. You’ll need to know what state the property was located in. And you will need to know whether the final loan(s) were recourse or non-recourse loans under that state’s lending laws. There is no general answer that can be given here. If we assume that the Form 1099-A from the lender is correct (and sometimes they are not, but still the 1099-A is a good starting point). Anyways if we assume that the 1099-A is correct, then the loan was a recourse loan since the box 5 was checked yes.

(a) I will approach the selling price amount first, since that is somewhat of an easier question. If this is a recourse loan, then the selling price is the lower of:

* the outstanding loan balance immediately before the foreclosure minus any debt for which the borrower remains personally liable after the foreclosure (Box 2); or
* the fair market value of the property being foreclosed (Box 4).

So on your Schedule D, line 8, you will write in the Address of the property that was foreclosed, followed by the date the property was acquired by yourself, followed by the date sold which is found in Box 1 of the 1099-A, followed by the sales price — which is determined using the rule above. That leaves us with just one additional piece of data to figure out, the cost basis.

(b) Your cost basis is your cost in the property. If the property was given to you by your family member, then your cost is the same as their cost in the property. If you bought it from them, you’ll use the price you paid. In addition to this purchase price, you will add any substantial repairs and improvements to the property. Once you have tallied this up, the final cost basis number goes on the Schedule D, line 8, column e.

If the selling price (column d) exceeds your cost basis (column e), then you have a gain on the foreclosure, and you’ll calculate the tax.

If the selling price is less than your cost basis, then you have a loss on the foreclosure, and further the IRS will not allow the loss. Write down the loss figure under column f, but then on the next line write in the description area “Nondeductible personal loss under Regulations 1.165-9.” and in column f write the same loss figure, but this time with a plus sign instead of a minus sign. In order to get this to record correctly in TurboTax, you’ll use the same dates and in the selling price field you’ll using the loss figure (but stated as a positive amount), and zero for the cost basis.

You can also use Table 1-2 found on page 5 of Publication 544 to calculate both the taxable portion of any canceled debt and/or the taxable portion of the foreclosure.

April 16, 2011 at 10:38 pm
(72) William Perez says:

Patty, to answer another part of your question, income taxes can be included as part of a bankruptcy discharge, but only if the taxes are “old enough” to qualify for discharge. For the details, refer to my article on bankruptcy and taxes.

April 17, 2011 at 9:43 pm
(73) Paul says:

Hi Everyone….I need Help !!

My wife divorced me almost 4 years ago and basically took the house from me through the Michigan court system. Her lawyer demanded a quit claim deed which I signed and then was kicked out of the house. All of our divorce paperwork clearly shows that she is responsible for all the maintenance, mortgages and anything related to the house including the tax benefits! So why in the hell did I get a 1099-A. What do I do now????

April 17, 2011 at 9:53 pm
(74) Paul says:

I forgot to mention that she let the property go back to the bank….she just abandoned it.

April 18, 2011 at 1:06 am
(75) William Perez says:

The bank might have sent you the 1099-A because you were still on the mortgage as a borrower. I suggest talking to a tax professional or perhaps a tax attorney about this situation. It stands to reason if title to the house was properly transferred to your ex-wife, then only she would be responsible for the tax reporting of the foreclosure.

April 19, 2011 at 2:50 pm
(76) Kim L says:

Ok..so here is another 1099A issue. We have been foreclosed on. Sheriff sale was Nov 2010. We also had a Home Equity Line of Credit (HELOC) of $12k that we owed on. Here is the dilemma. Even though we stopped making our mortgage payments, we continued to make our HELOC payments up until we received a 1099A from the bank that ALSO reflected the amount of the HELOC. (box #2 principal outstanding) When having our taxes prepared, our CPA stated ‘stop making your HELOC payment as you no longer owe this since you received a 1099′. So we did….. Now we are getting threatening letters, phone calls, etc from the bank stating that the 1099A was in their words “informational only” and we still owed them for the HELOC as it was not forgiven. SO NOW WE ARE REALLY CONFUSED! Do we owe the HELOC of $12k or do we not?? According to the bank we do and according to our CPA we don’t….NOW WHAT??

July 21, 2011 at 11:20 am
(77) George says:

You do not mention a 1099-S. Shouldn’t that follow the 1099-A at some point? Wouldn’t that get you the true selling price and thus the gain or loss on the property (and not necessarily the same year of abandonment)? Thx!

August 7, 2011 at 8:40 am
(78) rob says:

Received today: August 2011 a 1099A for a foreclosed property that says tax year 2009. I thought that these forms must be sent out in the tax year they are issue for. Anyone know??

September 29, 2011 at 3:06 pm
(79) Bea says:

I received a 1099-a with just date and no amount in it? Is this possible?

December 12, 2011 at 10:51 am
(80) Amy says:

I am in the same boat as comment number 76 (Kim). Any updates. We did the same thing, and are now in collections. I am currently fighting with collections and the bank to get this resolved. My 1099-A says that I am not liable for repayment! This was from a foreclosure in 2009, I had been paying collections since then, but decided to do some research to see if I should in fact still be paying that equity line.

January 9, 2012 at 5:02 pm
(81) ldc says:

live in Michigan–received 1099a today. Box 1 (5-18-2011) Box2 (165,484) Box 4 (86,000). Bank bought it back at sheriff’s sale for amount owed. Box 5 is checked. Do we owe money? What forms would we fill out?

January 9, 2012 at 9:12 pm
(82) ph says:

ldc – Same here except I won’t know the sherrif’s sale amount for 2 more weeks.

January 10, 2012 at 10:50 am
(83) Michele says:

My home was foreclosed in 2010 and I just got a 1099-A with 2010 year on it. Do I have to amend my 2010 federal tax return or file it with 2011? And it says the statement date is 1/20/2011! This is 2012! I feel like I am getting railroaded.

January 10, 2012 at 4:54 pm
(84) Amy says:

Update to comment (80)
The bank made a mistake and wants to send me an updated 1099-A showing I am responsible for repayment of the debt. I am not sure how to keep fighting this!

January 11, 2012 at 7:09 pm
(85) Tom says:

We filed chapter 7 bankruptcy in may of 2010 and included our primary residence which had a balance of $143,000 owed on it. The real estate market in our area went south and when the house was sold at sheriff sale in november 2011 it was purchased by the lein holder citimortgage for $82,000. Here is the kicker. On the 1099-a I recieved it shows the fair market value of the house at $185,000. Are we required to pay capital gains on the difference between the balance owed and the FMV?

January 15, 2012 at 1:40 pm
(86) roco says:

How do you fight a 1099-A? They are trying to say that the “FMV of the home is $176k when the real FMV of the home is only $45k – it sold after sheriff’s sale for $50k.

January 16, 2012 at 6:17 pm
(87) fran says:

I just receive a 1099-A. We filed chapter 13 in Nov 2010 and surrendered our house at this time. They should of foreclosed in Jan. 2011 but stalled until Sept.2011. The balance is 198,572.11 and fmv is 180,220.21 on the 1099-A. This is laughable because the true fmv is 80K not the above. Please tell me how we do this on taxes. I forgot to say that the chapter 13 was discharged (3 1/2 yrs early) in June of 2011 so we are not liable or considered insolvent.

January 27, 2012 at 2:32 pm
(88) Nina says:

So confused with all this! I hope & pray I don’t owe anything!!!!!!

I recieved a 1099a today

Box 2 has $182,939.94
Box 4 FMV $207,549.00

BOX 5 is checked that i am liable

Does this mean that they will not come after me since the FMV was listed higher than the debt owed in box 2

Help!!!!!!!!!!!!!!!!

January 28, 2012 at 4:00 pm
(89) William Perez says:

Nina, since box 5 of your 1099-a is checked that you are personally liable for the loan, then I suspect that your loan was what we call a “recourse loan”. In my article on foreclosures I discuss how to report a foreclosure on a recourse loan. Basically, you will have two tax reporting tasks: 1) to report the foreclosure as the sale of property, and 2) to report any debt that was canceled by your lender (there should be a separate 1099-C from the lender to report that amount).

January 29, 2012 at 3:29 pm
(90) Brenda says:

Our situation is identical to Nina’s (except for the dollar amounts) however, we have not received a 1099-C. What makes you think that we will receive a 1099-C? Is the 1099-C the difference between box 2 and box 4? Thanks!

January 30, 2012 at 8:25 pm
(91) William Perez says:

I suspect you’ll receive a 1099-C if there’s a check in box 5 indicating you are personally liable for the loan. This suggests to me that the loan was a recourse loan, and in that situation the lender will likely cancel any remaining debt on the loan that was not satisfied through the foreclosure sale.

January 30, 2012 at 5:14 pm
(92) David says:

I have a question regarding an estate receiving a 1099-A. Box 4 is higher that Box 2 and Box 5 is not checked. I have filed a 1041 for the estate year ending 6/30/11, but have not reported anything regarding the 1099-A. Should I amend this return even though I do not believe this will trigger a taxable event?

January 30, 2012 at 8:02 pm
(93) William Perez says:

The 1099-A reports that title (ownership) of property was transferred back to the lender. This is a disposition of that property, which is reported as if it were a sale, and this would go on Schedule D. You should revise the tax return (if needed) to report this sale of the property.

January 31, 2012 at 12:39 pm
(94) TONYZ says:

I am including teh following facts. Based on these facts do I claims ordinary income

1099-A Form
Condo was a rental propoerty.
Balance of Principal Outstanding: Box 2 $00.00
Fair Market Value of Property: Box 4 $45,000.00
Personally Liable: Box 5 Yes

January 31, 2012 at 12:42 pm
(95) TONYZ says:

Can I get an answer as to what I need to claim based on these facts?

Rental Property
1099-A Form
Balance of Principal Outstanding: Box 2 $0.00
Fair Market Value of Property: Box 4 $45,000.00
Personally Liable: Box 5 Yes

Do I owe any taxes, and on what amount?

February 2, 2012 at 8:35 am
(96) Elaine says:

if it is federal taxation how can a state decide which line is used to determine loss or gain in a foreclosure based on 1099 A’s lines 2 & 4

February 2, 2012 at 12:15 pm
(97) Betsie says:

I received a 1099-A form today.
Box 1 January 2011.
Box 2 135,000
Box 4 145,000
Other Boxes field EMPTY.
Box 5 shows nothing but “see details”. Details for box 5 is only a “description” though.

This was a rental property.

What should i understand about box 5 that doesn’t say YES or NO for whether I am or not personally liable for repayment of the debt??

Please HELP me!

February 5, 2012 at 8:37 pm
(98) William Perez says:

Betsie, you will need to read over the mortgage loan contract documents. That will specify whether (and to what extent) your loans are recourse (personally liable) or nonrecourse (not personally liable) under state law. Federal tax treatment of the loans depends on how the loans are classified under state law.

February 2, 2012 at 9:28 pm
(99) Darryl lewis says:

According to Turbotax 2011, if the 1099-A is for personal property, you don’t have to include it in your return. keep it for your records in case you get a 1099-C later…

different for buisness or rental properties..

hope it helps. I got my 1099-A Feb 2, after i did my taxes on Feb 1. IRS was no help on phone (after over 1 hour on hold!)

February 3, 2012 at 4:28 pm
(100) Ralph Carter says:

Much incorrect information about 1099-A and 1099-C. Bottom line is that this article is not correct. If you receive a 1099-A and you were upside down in the property (that is, the FMV is less than what was owed), you DON’T DO ANYTHING WITH IT. The mortgage company still has a choice to pursue a deficiency judgment against you or write off the remaining debt owed. This fact is conspicuously missing from this article – because it wasn’t written by an attorney. If you report the cancellation of debt income from the 1099-A, then what happens when the debt is ACTUALLY forgiven and you receive the 1099-C from the lender in the following year or two? In the alternative, if they pursue you for a deficiency judgment and you have already reported the cancellation of debt income because you received a 1099-A (not a 1099-C), then you will have reported the cancellation of debt income AND be facing a judgment from the former mortgage holder. That makes NO sense.

Talk to an attorney or a CPA, don’t take advice from a “Tax Preparer” or a website. For all the time you spend searching a good CPA or tax attorney can answer this question and explain it for less than you might think.

Please note that this message does not constitute legal advice and you are not to reply on anything stated herein as individual situations vary. Unless otherwise expressly indicated, the contents of this message are not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed under the Internal Revenue Code or any other applicable tax law, or (ii) promoting, marketing or recommending to another party any transaction, arrangement, or other matter addressed herein.

February 5, 2012 at 2:40 pm
(101) Ron says:

I really need help… I recieved a 1099A for a house I am still in. I am still in my redemtion period. Also I filed bankruptcy two years ago and to my undersand was disoved of any debt. However, once talking to someone at citi mortgage, he said someething about an automatic stay cause…. Anyway, what do i do… I know I have to report it, but should I right down that I’m not responsible and if so, on which line?

February 13, 2012 at 4:24 am
(102) Chris says:

I read through all the comments from the beginning and thought I finally was understanding what to do based on WILLIAM PEREZ advices and now RALPH CARTER got me back to square 1……HELP
box 2 $526,735.80
box 4 $258,000.00

February 21, 2012 at 11:11 am
(103) Trent says:

What if the FMV is incorrect? The FMV is showing 30K more than the outstanding principal and the home was sold for half of the outstanding principal. How & Why are they showing the FMV as 30K more? The house was underwater by more than 100K? Anyone know the answer?

February 21, 2012 at 3:33 pm
(104) Arman says:

My FMV is also higher than box 2 by about $8K. Box 5 is checked. The link that was provided above by TurboTax

http://turbotax.intuit.com/support/iq/Less-Common-Income/Information-about-Form-1099-A/GEN12256.html

clearly states that ” If you receive a 1099-A because you have abandoned personal property, such as a car, you don’t need to report it in your return.”.

So, I will not file this form 1099-a..Any opinions?

February 21, 2012 at 3:51 pm
(105) Deb says:

please consult an Enrolled Agent for the proper treatment of the 1099-A. The amount on the 1099-A may fully taxable, partly taxable or not taxable at all. One thing we know for sure, it’s not worth getting a letter from IRS about the improper of form 1099-A.

February 21, 2012 at 5:03 pm
(106) D3A4N says:

I received a 1099-A. But there is only 1 copy mine. Is there anything I need to do? I’m assuming no since I only received 1 copy.

February 21, 2012 at 6:55 pm
(107) G. Childress says:

I received a 1099-A. The amount owed is incorrect (box 2) and box 4 is also incorrect.

Box 2 shows 220,955.59 s/b 285,955.59
Box 4 shows 255,892.64 s/b 135,000.00

what can I do about this, isn’t this incorrect filing?
I had a second (same bank) and they did not include that amount.

February 27, 2012 at 1:02 pm
(108) Marques says:

I’m confused too. My home in AZ was foreclosed in March 2011. It was my primary residence and AZ is a non-recourse state. I received a 1099-A it shows:
Box 2: $238,782.14
Box 4: $238,782.14
Box 5: checked- that I am personally liable for the debt.
I’ve called the mortgage company and nobody gave me any information other than they will research it and have someone contact me within 24-49 hours.
I’ve already filed my taxes early in January before I received this 1099-A. Do I just wait and see if my former mortgage company will respond to me so I can then decide if I need to ammend my 2011 taxes? This is so frustrating!!!

March 1, 2012 at 8:28 am
(109) Amy says:

We lost a home in foreclosure Oct. 2011. We received a 1099-A showing
the amount owed and the fair market value, which is like $35K difference.
Found out the house sold in Feb 15, 2012 for what we owed. Do we get another 1099-A? What do we do?

March 12, 2012 at 2:22 pm
(110) Linda says:

House in TX foreclosed on Nov 1. FMV is listed on the 1099-A as $200K LESS than the balance due. The bank did not mark box 5 other than to say ‘see description’ which has nothing related to box 5.

This was NOT a primary residence but one I purchased for my daughter to live in. She lost her job and could not continue the payments and I can’t either, so we gave up the house.

Not sure what to do other than wait to see if we get a 1099-C. Is that the best course of action?

I can’t afford $200K as income!

March 12, 2012 at 3:14 pm
(111) Linda says:

This article answers a lot of questions if it was your principal home.

http://www.irs.gov/individuals/article/0,,id=179414,00.html

July 7, 2012 at 7:47 am
(112) holiday deals says:

I love looking through a post that will make people think.
Also, thanks for allowing for me to comment!

July 21, 2012 at 7:36 pm
(113) Goods at auction says:

Helpful information. Lucky me I discovered your web site by accident, and I’m surprised why this accident didn’t happened earlier! I bookmarked it.

September 1, 2012 at 8:19 am
(114)  says:

At the beginning I read this text, and that i just didn’t understand it. Just after taking a second look on the other hand your mindset is incredibly apparent.

October 15, 2012 at 9:57 am
(115) CHRISTINE says:

I have a client that received a 1099-A but not a 1099C for his second home. On the 1099-A the boxes have the following information in them.
1-4/13/11
2-351,321
4-250,000
5-checked
He also gave me a copy of the certificate of sale of the property on 4/13/11 for the amount of 250,001.
How do I treat this information on his taxes?

January 7, 2013 at 11:56 pm
(116) iris says:

included Wyndham (timeshare) in Chapter 7 Bankruptcy, All debts were discharged. Deed in Lieu of Foreclosure for the timeshare was executed after the discharge. The 982 form addresses Principal residence which does not apply to timeshares. What gives? please clarify.

January 29, 2013 at 9:16 pm
(117) Troy says:

Here is the IRS Rules…

http://www.irs.gov/publications/p4681/ch02.html

Recourse: Personally liable (should be checked on 1099-A)
Non recourse: Not Personaly liable (not checked on 1099-A)
Definitions below

1) Recourse:

Amount realized and ordinary income on a recourse debt. If you are personally liable for the debt, the amount realized on the foreclosure or repossession includes the smaller of:

The outstanding debt immediately before the transfer reduced by any amount for which you remain personally liable immediately after the transfer, or


The FMV of the transferred property.

The amount realized also includes any proceeds you received from the foreclosure sale. If the FMV of the transferred property is less than the total outstanding debt immediately before the transfer reduced by any amount for which you remain personally liable immediately after the transfer, the difference is ordinary income from the cancellation of debt. You must report this income on your return unless certain exceptions or exclusions apply. See chapter 1 for more details.

2) Non Recourse:

Amount realized on a nonrecourse debt. If you are not personally liable for repaying the debt secured by the transferred property, the amount you realize includes the full amount of the outstanding debt immediately before the transfer. This is true even if the FMV of the property is less than the outstanding debt immediately before the transfer.

Take that accountants and lawyers lol

February 2, 2013 at 1:11 am
(118) Cathy says:

What the heck is an FMV. All you guys are talking about it. What is it?????

February 2, 2013 at 1:24 pm
(119) William Perez says:

FMV is an abbreviation for fair market value. Fair market value is defined for tax purposes by the IRS as “is the price that property would sell for on the open market. It is the price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts.”

February 2, 2013 at 1:15 am
(120) Cathy says:

After reading a lot of these comments, I realize the banks will be hounding people for the rest of their lives. The banks have no rules and can do what ever they like. It won’t be long before there is a JAIL for debtors. The banks would love that.

February 5, 2013 at 9:46 pm
(121) janet says:

Am I liable for remaining balance of loan after sale amount deduction?

February 5, 2013 at 10:12 pm
(122) Janet T says:

So many us with same problem. I cannot believe this system to attempt collecting from people with obvious hardships. After 2 declined modifications and psy reductions. At my age I don”t know whst to.

February 7, 2013 at 5:57 pm
(123) Tammy says:

Ok, so my ex boyfriend and I forcolsed on our house. We have since split up. I recieved this 1099-A today in the mial. We both filed bankruptcy on the house 2 years ago to get rid of the debt. My question is, do we BOTH need to report this 1099-A on our taxes, and do we need the 1099-C i read about in your explanation? Thanks

February 7, 2013 at 6:37 pm
(124) Tammy says:

Hi! I have a couple questions. My ex and I bought a house in 2007. We broke up and forclosd on the property and filed bankruptcy in 2010. I recieved a 1099-A in the mail yesterday. the date of knowledge or abandonment is 1/11/12. The house has since been sold. Do I need to wait for a 1099-C or is this all I need? Also, does he have to file this 1099-A with his taxes since his name was on the house too?

February 7, 2013 at 6:55 pm
(125) tammy says:

i also forgot to say the house and since been sold, that is why im wondering about the 1099-C

February 10, 2013 at 4:24 pm
(126) Elmer says:

If you received a 1099A and the property is personal or your principal residence, and fair market value of the property is less than the outstanding balance you have a loss. don’t worry you do not neet to file your 1099a. now if the property is a business or rental house then you have to file a schedule D or 4797 form to claim your losses by using the information on the 1099A. now if the there is a gain then you have to file schedule D on the residential excluded up to 250,000 gain for single and 500,000 for joint return. for business you have to file 4797 form.

If you received a 1099c you have to file 982 form to claim the exclusion from your residence up to 2,000,000.00 or less, exclustion is not available on 2013. If you forclose your house in 2013 you have to file bankrcuptcy or file insolvency to claim the loss.

Good Luck!! Master tax adviser.

February 18, 2013 at 8:19 pm
(127) George says:

I just received a 1099-A and I signed a deed in lieu of foreclosure on 4/18/12. I have no clued what to do with this thing. Box 2 has a principal outstanding of $111,889.23 and Box 4 has FMV of $45,000.00. What am I supposed to do with it? My income tax will be affected by this 1099-A?

March 4, 2013 at 6:40 pm
(128) Niki says:

Our mortgage lender has refused to send us a 1099-A following foreclosure on our primary residence (Colorado) in December 2012. The IRS says they have no way to make the lender send out the 1099-A, although they agreed we should have one.
All I want is to file my taxes and be done with last year! Is there a way to get around not having a 1099-A from the lender and still report the foreclosure on our taxes?

March 18, 2013 at 1:46 pm
(129) Rkelley says:

If you we’re a partner in a piece of business property. And the property went back to the financial institution in 2011. And for 2012 you receive a 1099 for the debt forgiveness for 3 million. What is the personal tax consequences?

March 21, 2013 at 8:38 pm
(130) William Perez says:

The partnership should calculate the taxable portion of the income from the cancellation of debt, and then report that on its partnership return, and allocate that income to each of the partners. The taxable portion of the canceled debt is the amount of debt less any exclusions that are permitted. There’s a very thorough discussion of cancellation of debt income from tax attorney Robert McKenzie, and he addresses partnerships in this article as well. The IRS discusses canceled debts in Publication 4681.

March 29, 2013 at 8:16 am
(131) Duplic8tor says:

This seems to be a really confusing topic, however, after researching it in various ways – calling the mortgage lender, referring to the turbotax web site (i use TT to prepare my taxes), and other things, the link I’ve posted says that you DO NOT have to report a 1099-A if it is for abandonment of personal property. Business property is different. My home was foreclosed in 2012 and I thought the following applied:

1) I owe the balance of the loss the bank incurred… does not appear to be so, even though box #5 in the 1099-A is checked YES.

2) That I had to pay taxes on the loss of the property… apparently I do not, according to the link I’ve posted. So, I’m feeling much better. I can’t imagine TT would suggest you DO NOT have to file the 1099-A if that were not the case.

If anyone has information contrary to what I’ve posted, please advise.

Thanks, Duplic8tor

April 3, 2013 at 1:47 pm
(132) Confused says:

Based on the comments I have seen. It appears that you do not have to have to report a 1099-A if it is for abandonment of personal property.
Could you still recieve a 1099-C in the future? What if you receive a 1099-C 2 years from now after The Mortgage Forgiveness Debt Relief Act has expired? Must the bank send you a 1099-C in the same year as the 1099-A?

November 8, 2013 at 11:09 am
(133) Lan says:

excellent article. thanks so much.

January 11, 2014 at 11:18 pm
(134) Kay says:

I received a 1099-A from the state where my home sold but I lived in a different state that same year of the sale. How do I file my taxes? I know the handling is based on state laws for the tax application/implication for the 1099-A, but I was going to file with the state that I lived in…do I need to get the state filing figured out before I can file federal? It’s already complicated before we cross state lines…or does all this get figured out when I file federal?

January 31, 2014 at 10:11 pm
(135) Jon says:

This is a great write up. Thanks for the clarification.

February 1, 2014 at 11:37 pm
(136) Ernest Hanson says:

I see a lot of comments & questions but no answers, why no answers?

February 4, 2014 at 10:34 am
(137) Laurie says:

I received a 1099-A yesterday but yet I filed bankruptcy on my house 2/12, what do I need to do with this? It says I abandoned the property on 3/13. Thanks for you help!

February 6, 2014 at 9:45 am
(138) Krista says:

I received a 1099 a for abandonment on a timeshare property.

Date of acquisition or abandonment is June, 30 2013

Box 2: 7,061.49

Box 4:11,990.00

Box 5 is checked yes.

What do I do here? Really confused from all the different things being said and it doesn’t seem like much was answered about vacation properties, please help?

February 6, 2014 at 2:41 pm
(139) Kerri says:

After spending hours reading this and other forums I finally just paid a tax expert for an answer to this question we all have here and no one can answer. So here it is peeps- hope my $34 for this question helps you!

I filed bankruptcy and it was discharged in 2010. I included my primary residence (the loan associated with it) as I knew it would foreclose. The bank finally foreclosed 12/2013. I just received a 1099 A form for it which shows a loss. I know I cant claim the loss, I also know I am not liable for any taxes on it since I listed it in my bankruptcy. First question- do I have the right form, or should the bank have send me a 1099 C? Second question, how do I list this transaction on my taxes- I do them myself on tax act?!
Thank you for your question, my name is XXXXX XXXXX I will be happy to help you today
The 1099-A is the form that shows you the disposition of the asset. You may also get a 1099-C for the same thing.
You do not need to show this on your taxes, as it was your primary residence. No losses are required
Customer:
Hello, so I do not need to do anything- even list the transaction on my taxes, regardless if I got the 1099 A which I did or even if I receive a 1099 C from them in the future? I thought I read that I had to at least list the transaction on my taxes.
Megan C : No, you will list the transaction when you get the 1099-C, but not the 1099-A
Megan C : For the 1099-C you would fill out form 982 and mark the box for bankruptcy
Customer: OK, I called the lender and they did not have any idea what I was talking about with the 1099C. Will I definitely be getting one- is this the form I should have received having filed bankruptcy? I am trying to finish my taxes and I cant until I know what to do meaning should I wait for this form?.
Megan C : The 1099-C is for the cancellation of debt. You may not get it until a later year
Customer: ok, and if so I will file for the next year, or do I need to amend?
Megan C : No, you do not need to amend

February 7, 2014 at 10:10 pm
(140) neil says:

The Florida residential house belonged and owned solely by my husband . He decided to make a bank loan and asked me to co-sign it. After 2 years, he died. The house didn’t go into probate, and never been transferred to my name. In 2010, the bank filed a foreclosure case against me and my late husband. I told the bank the house is vacant/unoccupied. The bank took the house and sold it to the highest bidder in 06/03/2013. A 1099-A was sent to me addressed to both of us with his taxpayer’s ID only in the form. Here’s my questions:

1.)What am I supposed to do in filing the IRS 1040 now that I have to file as a single person, since he has been dead in 2009.

2.) Am I liable for all the income or the difference between the original purchased price of the house against the bank’s selling price of the house and the remaining loan that still outstanding or to be paid?

3.) His taxpayer’s ID is the only ID showing on the form, but my name is included. Do I have to file this form in my 1040 return?

4). In the future 2014 or coming years, if the bank go after me to collect the outstanding/remaining unpaid loan, or gives me a cancellation of debt. Do I have to pay income again for the debt forgiveness should the bank sends me another 1099-c

February 12, 2014 at 1:59 pm
(141) jorge says:

I principal residence was foreclosed on 06/27/2013. I received a 1099-a from the lender.the fair market value was less then the principal outstanding balance. how does this effect my taxes. do I report them, and do we have to pay taxes ? thank you

February 19, 2014 at 7:51 pm
(142) Lew B says:

It is interesting that this thread has continued on since at least 2010. Now there are now no answers to a lot of recent questions?

February 24, 2014 at 11:53 am
(143) John says:

I lost my job and we could not afford to keep up payments on house. Therefore I had to file Chapter 13. My attorney advised me to abandon the house and we did so. I received a 100A in the mail and now I trying to determine wether it will affect my income or not. The house was originalling purchased for $98000 and we owed $72000 on it when we left it. The house was repo and sold for $56000. So…….. I am still stumped as what to do. In box 2 on the 1099A it has $72000 and in box 4 $92000. please help me with this if you can.

March 31, 2014 at 10:33 am
(144) sylvia says:

It is ridiculous that I can not find an absolute answer for what to do with a 1099-A. IRS is in possible to get hold of a real person to answer a question. IRS on wants you to read 3 different pubs. One of which gives an example of one 1099A that is for other property besides a house, but no answer on how handle any better than they can for a house. Extremely upset.

April 4, 2014 at 5:46 pm
(145) Pesi says:

You will need to file a form 982 also. Check it out.

April 14, 2014 at 8:18 pm
(146) JBeez says:

Received a 1099-A for The Albatross (the house that would not sell). No sign of a 1099-C. Hasn’t been sold; still bank-owned, according to the county auditor’s site.

–I owned from 1999-2013
–lived in until 2006
–moved in with dying Mother, put house on the market (twice, no offers)
–not a rental
–not a home office
–not a primary residence

FMV (Box 4) is higher than principle owed (Box 2). I am personally liable.

Very confused. Most sources say when FMV is higher than principle owed, that’s a capital gain and goes on Schedule D. BUT it’s not my primary residence or a rental. Other sources vary on how to report the income and which line to use.

TurboTax said I could file the 1099-C but not the 1099-A, just to hold onto that until the 1099-C arrives showing the cancellation of debt, which <b>would</b> be reported. I’ve no idea what to do, so I opted to skip filing the 1099-A this year, and we’ll wait and see.

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