1099A, WHERE DOES IT GO?

[Marie]

Client received a 1099a on her previous home.  It's marked that she was liable for the loan.  She has not lived in the home for several years.  The FMV is less than the principle balance.  How and where is it reported and will any be taxable?  

[mcb39]

Form 982

 

[Marie]

OK, THANKS.  Is there a place to enter the amounts from the 1099A   I can't seem to find a place to put abandoned property. I've done this before, but not lately.  

[Marie]

Nothing in the instructions seem to apply to this circumstance.  She didn't get a 1099c  just a 1099A

[BrewOne]

The 1099-C is not always issued in the same year.  There's a worksheet in Pub 4681, be sure and use the one for recourse loans.

[Lion EA]

Sale of Home.

[Lee B]

See Pub 4681  -  page 14

[jklcpa]

Agree with the others above. It's reported as a sale of home with foreclosure and possible component that is ordinary income for the amount of debt forgiven. If memory serves, it is in pub 523 for the home sale with foreclosure and the worksheet in pub 4681 that Lee referenced above.

[Marie]

thank you all

[Sara EA]

This is reported as the sale of the home, so it is capital not ordinary income.  With a recourse loan, the amount realized is the FMV of the home as reported on the 1099A.  Basis is the usual:  purchase price plus improvements.  There may be a capital gain, but a loss will be personal and disallowed.  Ordinary income will come into play when a 1099C is issued.

[TexTaxToo]

On 6/24/2024 at 4:53 PM, mcb39 said:

Form 982

If a 1099-C is issued, Marilyn is correct that if this was a qualified mortgage on a principal residence, Form 982 is used to exclude the income (or a portion of it). 

But in this case there was no income as only a 1099-A was issued and the FMV was less than the basis (presumably).  So the home sale is just reported on Form 8949 - adjustment code L is used to eliminate the loss so that the reported gain (or loss) is zero.

13 hours ago, Sara EA said:

With a recourse loan, the amount realized is the FMV of the home as reported on the 1099A. 

For recourse debt, the amount realized is actually the lesser of the fair market value – or – the debt balance minus any remaining amount owed after the discharge (usually none) – so the lesser of boxes 2 and 4 on Form 1099-A - in this case, the OP stated that the FMV was less than the principal balance, so FMV is correct.