Bankruptcy and Rental Property

[cpabsd]

Client filed Chapter 7 bankruptcy during 2009. It was also finalized during 2009. Included in bankruptcy was rental property. However, client recieved a Form 1099-A for the property. I thought if part of bankruptcy, no 1099-A was to be issued. Do I need to show sale of Rental property on tax return or just remove the rental property from the return? Where is the best place for guidance on this topic?

Thanks!

[carolynm]

Publication 908 - I read it about 5 times last week trying to understand everything. I don't think I understand half of it yet...but I grasped enough to get a return done. Be sure to get copies of clients bankruptcy petition, statements etc. -these really helped me see what exactly went through the bankruptcy. You will probably find the rental just comes off the return IF the property was surrendered in the bankruptcy.

Caution: I don't proclaim to be an expert!

Carolyn

[Pacun]

If the bank issued 1099-A, you have to deal with it. You can file sch D.

[RoyDaleOne]

It is not reported by the taxpayer if it was part of the bankrupt estate. SECTION 108 et al.

[RoyDaleOne]

Is there not a Form to handle this?

[cpabsd]

Thanks everyone. I will read Pub 908. The client is providing me with all the documentation regarding bankruptcy. Then, I can finish the return.

[carolynm]

You may want to use form 982 to account for the 1099-A. You don't have to report the income but I believe there is a box you can check off so that you don't get any IRS mismatch inquiries later on..