1099C New Question

[Tax Prep by Deb]

I have a client who was given a 1099-A with an amount of $488,975.48 in box 2 (balance of principal outstanding) and box 4 (fmv of property) with box 5 checked that borrower was not personally liable for loan.

Then they also received a 1099C which shows box 2 (amount of debt canceled) $291,735.05 and in box 3 (interest if included in box 2) $30,783.39, and in box 7 (fmv) $240,000.00).

My question is basically dealing with box 3. What if anything do I need to do with this amount? How does this get figured into the equation?

Thanks for any help,

Deb!

[RoyDaleOne]

See Page 2 of Pub 4861 Interest included in canceled debt.

http://www.irs.gov/publications/p4681/index.html

[Tax Prep by Deb]

See Page 2 of Pub 4861 Interest included in canceled debt.

http://www.irs.gov/publications/p4681/index.html

Thanks,

I knew I had read that in that publication but I could not find it. I am getting so tired of thinking on these foreclosures!

Deb!