2006 1099-A

[David]

I am preparing a client's 2006 tax return. She received a 1099-A that year for the acquisition of her principal residence, which she had lived in for at least 2 years.

I thought the IntelliConnect program had prior year tax information but I can't seem to find the 2006 tax law. Can anyone tell me how to find the 2006 ruling for this situation in IntelliConnect?

Also, does anyone know the 1099-A will be handled for the 2006 tax year?

The 1099-A shows that the borrower was personally liable for repayment of the debt. The principal balance outstanding is $149K and the FMV is $170K.

Is the TP liable for any taxes related to the 1099-A?

Thanks.

[Pacun]

I am preparing a client's 2006 tax return. She received a 1099-A that year for the acquisition of her principal residence, which she had lived in for at least 2 years.

I thought the IntelliConnect program had prior year tax information but I can't seem to find the 2006 tax law. Can anyone tell me how to find the 2006 ruling for this situation in IntelliConnect?

Also, does anyone know the 1099-A will be handled for the 2006 tax year?

The 1099-A shows that the borrower was personally liable for repayment of the debt. The principal balance outstanding is $149K and the FMV is $170K.

Is the TP liable for any taxes related to the 1099-A?

Thanks.

The first thing you need to find out is the basis of the house and why she sold/dispossed of it if she lived (as her primary residence) and owned it for less than 2 years within the last 5 years prior to the date on 1099-A. If she lived and owned it for at least 2 years of the last 5 years prior to selling/dispossing of it, she can exclude $250K of the profit or $500K depending on her filing status. If she depreciated the house and has a profit, you will need to recapture.

If she has a loss, report the loss as personal loss and do not worry how long she lived there.

Keep in mind that if she had 2 loans, you might be looking at the 1099-A for the bigger loan and the second loan could make her basis on the house more than $170k.

[joanmcq]

I don't understand the question. She received a 1099-A for the accquisition? or disposition. Generally if the FMV is higher than the loan value, there is no COD and therefore no taxable transaction on a pricipal residence.

[Pacun]

I don't understand the question. She received a 1099-A for the accquisition? or disposition. Generally if the FMV is higher than the loan value, there is no COD and therefore no taxable transaction on a pricipal residence.

You still have to report it because the IRS only knows that you got some profit based on the 1099-A. They do not know if that house was your primary residence or if the house was wiped by a tornado and your basis became 0 after the insurance company paid you (you could be selling only the land after the tornado). They also don't know how you put your hands on the house, etc.

[joanmcq]

Thanks Pacun, I think I misread the OP. Report as sale, but there shouldn't be COD. Might be gain or loss, and neither will likely have a tax effect.