1099-A (options??)

[ILLMAS]

TP received a 1099-A, from the IRS instruction is to treat it as a normal sale of a property, the problem is the TP is going through hardship for a while and won't be able to pay the gain, is there any options (beside a payment) for him? 

FYI not confusing a 1099-A with a 1099-C

[Abby Normal]

Are you using the fair market value of the mortgage balance as the sales proceeds? I just did one and in this case we determined we should use the mortgage balance, which resulted in a gain but it was all in the 0% bracket.

Is this a rental or their residence?

[ILLMAS]

Are you using the fair market value of the mortgage balance as the sales proceeds? I am using the outstanding principal balance from the 1099-A as the sales price.

 

1099-A

Box 2  $510K  Balance of principal outstanding

Box 4  $500K  FMV of property

Basis $322K

Gain  $188K

I am going to ask the TP if he owed less then what they are saying, but for my records/reference, can you point me to where you are getting your information from?

Thanks

MAS

 

[SaraEA]

You are correct to use the balance of the mortgage as the starting point.  Here's the worksheet from the very helpful pub:  https://www.irs.gov/pub/irs-pdf/p4681.pdf

Alas, your client has a $188k gain.  You might whittle that down a bit by examining the original purchase docs.  Were all the mandatory fees paid by the buyer added to basis?  I know sellers pay the bulk of the expenses, but some things like title searches, title transfer fees, postage, maybe he had his own attorney involved, all should have been included in basis.  Also make him do a serious search of his records for any improvements.

If he's in a tough financial situation, try an OIC.