Home Sale

[Janitor Bob]

If taxpayer sells main residence and meets all requirements to exclude all of the gain...and does NOT receive a 1099-S, do they need to report the sale on their taxes at all?

[rfassett]

Not for federal. Some states may require it.

[michaelmars]

• How do you know the 1099--s wasn't lost in the mail? No harm in filing the info

[Janitor Bob]

GOOD POINT

[kcjenkins]

I ALWAYS report them, JB, because it is by filing and claiming the 212 exception that you protect the client. I don't think that exception is automatic, you should always do the Sch D and claim it.

[jainen]

>>meets all requirements to exclude all of the gain<<

One can't actually know this without doing the calculations. Even if it seems obvious, I write it out. (Tax Tools is a good start but I usually put more details in the margins.). It might not be so obvious later on, or the taxpayer might even be giving incorrect information. I think the IRS instructions are stupid but I follow them--don't report on Schedule D.unless required.

[Hahn1040]

The fact that the 1099-S is issued and the client knowing (or remembering) that they received it can be two different things!

Example one: 2010 client sold house she had owned for well over the required two years. She had always lived in it. When she didn't have a 1099-S, I wasn't concerned because there was no reason that she should have received one. Jan 2011, she sends me the letter she had received from the IRS. The tax on a $450,000 house adds a LOT to one's tax liability. OF course, it was just a matter of sending the IRS the Schedule D.... but it takes time and effort.... to say nothing of the client's shock of getting the letter!

Example two: 2012 client does short sale. When asked for the 1099 C and 1099-S she "did not get any forms". She insisted that she had asked the people who did the paperwork and she didn't need to file anything on her tax return. I insisted that she bring me the papers from the short sale. Indeed- there was the 1099-S. I did not find a 1099-C. But will do the 982 and the Schedule D. Why would I not include it!

It takes a lot less time to include it in the return than to answer the IRS letter later!

[joanmcq]

The 1099-S is usually included with the sale docs, not mailed later, at least in CA. I always ask for the HUD statement in a purchase, sale, or refi. Reporting is easier than dealing with a notice later.