Form 1099-A

[Lucho]

My client declared bankruptcy at the beginning of 2013 and got a Form 1099-A with boxes 2 $182,000.00 +, 4 $148,000.00 + and box 5 checked (liable for repayment).

This was a Chapter 7 case. The property was never use as main home but rented.

What is the best way to report this? Reading the IRS/bankruptcy, tells me this can be excluded through chapter 11 but do not mention chapter 7 at all; should we wait until my client gets the 1099-C? or disregard this issue as a result of the bankruptcy?

At this time I am so tired that and don't see myself thinking straight. Probably will file an extension. I was so happy that the season was almost over but...

Any help will be appreciated.

Lucho

[kcjenkins]

I'd wait for the 1099-C.

[joanmcq]

Was it sold/ foreclosed on this year? Then it's a reportable transaction.

I got a new client where for a loan mod they didn't issue the 1099-c "because they have 5 years to do so". It was a mod that was a first for me, a 'short pay'. Apparently the client got a large settlement for medical, and the bank agreed to a lesser amount of principal for,a lump sum payment, and now the client owns the house outright.

Now I just have to determine if the settlement is taxable...no 1099-misc. have the docs, I think. Well, I know I have SOME docs on it.....

6 days...

[Lucho]

Thank you to both Kc. and joan.

Lucho

Late Good Night.

[Jack from Ohio]

Even if it was discharged through bankruptcy, you must report the property as sold with the sale price being the amount of debt discharged.

Calculate basis in the normal fashion. There may be a taxable capital gain on the transaction.

The 1099-C for cancellation of the debt may come later and is a totally separate event and is handled differently.

1099-A is NOT cancellation of debt, but transfer of ownership. Do not confuse it with discharge of debt.

Also, the FMV shown on the 1099-A has no value in the calculations of gain or loss on the sale of the property.

[Lucho]

Even if it was discharged through bankruptcy, you must report the property as sold with the sale price being the amount of debt discharged.

Calculate basis in the normal fashion. There may be a taxable capital gain on the transaction.

The 1099-C for cancellation of the debt may come later and is a totally separate event and is handled differently.

1099-A is NOT cancellation of debt, but transfer of ownership. Do not confuse it with discharge of debt.

Also, the FMV shown on the 1099-A has no value in the calculations of gain or loss on the sale of the property.

Thank you jack.

Lucho

I am really please with the way the program worked this year. All I need after the season is to learn more how to use Windows 8.1 which is a real headache for me as an adult use to old fashion.