believe i made a mistake?!?! 1099a and 1099c

[KEYWEST_RICKS]

taxpayer received a form 1099a for 2012. I excluded the income on debt forgiveness with a form 982 on his 2012 return.

then for 2013 the taxpayer receives a form 1099 c on the same property.

i believe this should have been reported as a sale of personal residence in 2012. He would not have a gain on the sale.

then cancellation of debt would have to be dealt with on the 2013 return and treated appropriately.

which i believe means an amended 2012 return.

does anyone on here agree with me??

thanks

jeff

[Mr. Pencil]

i believe means an amended 2012 return.

I wouldn't immediately jump to that conclusion without more facts--starting with whether it even makes a difference in tax liability for either year. Assuming the exclusion was taken in good faith last year, there is no statutory requirement to amend it.

But that's a big assumption. In my state all purchase loans for a principal residence are automatically non-recourse, so a 1099-C would suggest the loan had been refinanced. And that might not be eligible for exclusion as "qualified principal residence indebtedness."

If that's your situation, you should amend and fix everything. Otherwise, file this year correctly with the 1099-C, and make sure you keep complete records to respond to any IRS letter that may show up.

[Jack from Ohio]

You are correct. You did make an error.

1099a is NOT debt forgiveness. It is to be treated as a sale. Use the amount of the forgiven debt as the sales price and use appropriate basis.

Depending upon the numbers, the taxpayer may have had a taxable gain in 2012.

1099C IS debt forgiveness and should be handled with form 982 in the year the 1099C was issued.

[kcjenkins]

I have to agree with you, because you have the docs and the info, so if you say that, based on what you know, it should have been reported as a sale last year, then you should amend and report it that way, assuming it makes a change to the amended year.