Foreclosure

[Donny]

new to me and I have never done a forecloser. so I need help making sure I have the amts in right place.

1099a

box 1 3/14/07( date of lender's acquistion ) date sold?

box 2 34541.549 balance of principal oustanding( sale price?)

box 3 blank

box 4 42000.00 fair market value( basis?

This goes on Sec D? thanks for your help and for not making remarks because we all have to learn how.

[Pacun]

Yes, it goes to schedule D for matching purposes.

Did your client get a 1099-C? If not, s/he might get one for 2008 and you should advise them for that too.

[Donny]

new to me and I have never done a forecloser. so I need help making sure I have the amts in right place.

1099a

box 1 3/14/07( date of lender's acquistion ) date sold?

box 2 34541.549 balance of principal oustanding( sale price?)

box 3 blank

box 4 42000.00 fair market value( basis?

This goes on Sec D? thanks for your help and for not making remarks because we all have to learn how.

no 1099C is the info entered as above, if so she had a loss, she stated it was sold for less than was owed on the home. but can this be claimed as loss, the way I read it she can not claim a loss on personal resident. I am totally confused here so I need all the help i can get and thank you very much

[Janitor Bob]

no 1099C is the info entered as above, if so she had a loss, she stated it was sold for less than was owed on the home. but can this be claimed as loss, the way I read it she can not claim a loss on personal resident. I am totally confused here so I need all the help i can get and thank you very much

You cannot claim the loss on personal residence and certain amounts of gain (if they existed) could be excluded in same fashion as ordinary home sale.

[Pacun]

The numbers you have entered don't make much sense... can you omit the cents? AND maybe use commas where appropriated.

Not only can't you deduct any loss, but you are also required to pay taxes on the debt forgiveness! Luckily for your client, the President signed that law at the end of 2007 where debt forgiveness on primary residence is also forgave by the IRS.

[kcjenkins]

Whoa, folks. This was a 1099A, not a 1099C. Nothing to be reported yet, because until the property is sold, he can not know what the bottom line is. He will probably get the 1099C for 2008, when the property is sold.

[Donny]

The numbers you have entered don't make much sense... can you omit the cents? AND maybe use commas where appropriated.

Not only can't you deduct any loss, but you are also required to pay taxes on the debt forgiveness! Luckily for your client, the President signed that law at the end of 2007 where debt forgiveness on primary residence is also forgave by the IRS.

thank you , so therefore I wait till she gets to 1099c and get the amt. sold for then figure on Sec d, right? thank you so much

[kcjenkins]

Yes, and then you may not have to recognize any income anyway, thanks to §121 and also the new foreclosure of primary residence rules. Just have to be sure it is reported correctly at the time.

[Pacun]

According to other experts (KC is an expert), if box 5 is checked yes, and the amount of line 4 is less than line 2, this is reported as a sale AND the IRS has a copy of this. You need to report it this year as a sale and next year you will report the debt forgiveness.

[jainen]

>>next year you will report the debt forgiveness<<

Foreclosure for less than the amount owed will not necessarily create debt forgiveness. Some home loans, especially purchase money, are non-recourse. Where the lender enforces a deed of trust rather than a mortgage, the borrower is not personally liable and the property satisfies the entire debt. The balance owing is considered part of the sale price even if it exceeds FMV, and there is no relief of debt income.

[Pacun]

I thought box 5 checked YES, took care of your comment. We DO appreciate all your inputs, though!

[jainen]

>>I thought box 5 checked YES, took care of your comment<<

It does, unless the lender lies about it. But that would never happen, because mortgage companies are just about the most honest people in the country.