Form 982 Cancellation of debt from Form 1099-A

[ILLMAS]

My client received a 1099A, I will use different figures for my question:

Box 1 10/02/08 Date of Lender acquisition

Box 2 $180,000 Balance of principal out

Box 4 $233,000 FMV of property

Box 5 Yes Was borrower personally liable for repayment of debt? YES

This was his personal residence for +10yrs

This is a recourse debt, however the canceled debt is less then the FMV (180,000 - 233,000 = -53,000), so using Tabe 1.2 (Worksheet for Foreclosure and Repossessions) Part 1, -53,000 is less then zero, so my client does not have to report the lose? He would he it was the other way around? I would appreciated if someone can help me on this one.

Thanks

[Bart]

My client received a 1099A, I will use different figures for my question:

Box 1 10/02/08 Date of Lender acquisition

Box 2 $180,000 Balance of principal out

Box 4 $233,000 FMV of property

Box 5 Yes Was borrower personally liable for repayment of debt? YES

This was his personal residence for +10yrs

This is a recourse debt, however the canceled debt is less then the FMV (180,000 - 233,000 = -53,000), so using Tabe 1.2 (Worksheet for Foreclosure and Repossessions) Part 1, -53,000 is less then zero, so my client does not have to report the lose? He would he it was the other way around? I would appreciated if someone can help me on this one.

Thanks

The 1099A reports a sale not a cancellation of debt. All you have (at this point) is a sale of a personal residence at a loss which is not deductible. If you receive a 1099C, then you can deal with the cancellation of debt.

[LindaB]

All you have (at this point) is a sale of a personal residence at a loss which is not deductible.

You don't know if there is gain/loss until you look at the client's basis, but shouldn't matter if it's a personal residence.

[Bart]

look at the client's basis

Oops you are right. My bad.