Oh Baby! Posted April 9, 2008 Report Posted April 9, 2008 Client brought in a 1099-A, Acquisition or Abandonment of Secured Property, which shows that the bank took back a property that had a mortgage of $184K (box 2) and a property fair market of $145K (Box 4). Can someone please tell me what the tax ramifications are here? Does this alone constitute income to the taxpayer or does there also have to be a 1099-C, cancellation of debt? Quote
indyscott Posted April 9, 2008 Report Posted April 9, 2008 http://www.irs.gov/pub/irs-pdf/i1099ac.pdf Instr for 1099A & C It looks like the lender hasn't cancelled the debt yet, only taken back the property. Probably because they didn't happen in the same year. There will probably be a 1099-C for 2008. Quote
jainen Posted April 9, 2008 Report Posted April 9, 2008 >>Probably because they didn't happen in the same year.<< It is also possible that there is NO cancellation of debt. Maybe the lender isn't going to let the borrower get out that easy. Or maybe it was a non-recourse loan (Form 1099-A Box 5) that is completely covered by the property itself. In either case, report this foreclosure as a sale at FMV since that is less than the balance due. Quote
LindaB Posted April 9, 2008 Report Posted April 9, 2008 You will also need the basis of the property, and report the sale how you would for the type of property--personal, investment, or business. Quote
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