Trnr395 Posted February 8, 2014 Report Share Posted February 8, 2014 I have a client that rec'd a 1099C for a house that was foreclosed on. He has since been living somewhere else as his primary residence for the the last 4 years or so. The amount of debt cancelled was $82,000 and the FMV of the house was $65,000. Do I put the difference on "other income" or do I have to show this through schedule D as a sale? Or am I completely of base.... Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted February 8, 2014 Report Share Posted February 8, 2014 MORE INFO NEEDED. Was this his primary residence at the time of the foreclosure? If so, it could be treated as a sale of residence, and no need to have any of it taxable. Was it a recourse loan? Quote Link to comment Share on other sites More sharing options...
Mr. Pencil Posted February 8, 2014 Report Share Posted February 8, 2014 Do I put the difference on "other income" or do I have to show this through schedule D as a sale? Maybe both. There are a number of variables to look at. The IRS has a good book available, Pub 4681. It isn't real easy reading because there are lots of words that look ordinary but have specialized meaning, so pay attention to definitions and explanations. Also search this forum for "1099C" and you'll find examples of the rules applied in various scenarios. Quote Link to comment Share on other sites More sharing options...
MsTabbyKats Posted February 8, 2014 Report Share Posted February 8, 2014 You need to check Form 982....and see if the client qualifies for an exclusion. If not,,,the Box 2 amount is taxable on Line 21. Quote Link to comment Share on other sites More sharing options...
Trnr395 Posted February 10, 2014 Author Report Share Posted February 10, 2014 Thanks guys, It wasn't his primary residence at the time of foreclosure. I will have to get some more info from him. He is a neighbor of my parents and he talked to them about it. Not my client and will need to talk to him for more specifics. Thanks again. Quote Link to comment Share on other sites More sharing options...
Lee B Posted February 10, 2014 Report Share Posted February 10, 2014 I agree Pub 4681, has a number of good examples which I find are fairly well written. Quote Link to comment Share on other sites More sharing options...
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