ILLMAS Posted February 21, 2015 Report Share Posted February 21, 2015 TP lost his job in 2011/2012 and was not able to make mortgage payments, through a non-profit agency they were able to get the bank to lower their mortgage payment. Finally after going back and forth to court, the judge asked the bank just to reduce loan amount since the TP has been paying the mortgage payment without a problem, bank agreed and sent the TP a 1099-C for 100K. My question is, TP was insolvent back then, now in 2014 TP is doing a little better (has a job now), can this amount be report on form 982? Thanks MAS Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted February 21, 2015 Report Share Posted February 21, 2015 TP lost his job in 2011/2012 and was not able to make mortgage payments, through a non-profit agency they were able to get the bank to lower their mortgage payment. Finally after going back and forth to court, the judge asked the bank just to reduce loan amount since the TP has been paying the mortgage payment without a problem, bank agreed and sent the TP a 1099-C for 100K. My question is, TP was insolvent back then, now in 2014 TP is doing a little better (has a job now), can this amount be report on form 982? Thanks MAS It is my opinion, that since the cancellation was for debt on his primary residence, you can use that reason for not taxing it on form 982. We had a very similar situation. 2 Quote Link to comment Share on other sites More sharing options...
frazzled Posted February 21, 2015 Report Share Posted February 21, 2015 I second Jack's treatment Quote Link to comment Share on other sites More sharing options...
mcb39 Posted February 21, 2015 Report Share Posted February 21, 2015 I second Jack's treatment I third it. Just had to file a 982 for that exact reason. Quote Link to comment Share on other sites More sharing options...
Lee B Posted February 21, 2015 Report Share Posted February 21, 2015 You will need to look at the closing statement for this loan, especially if it was a refi. They may have taken cash out or paid off credit cards etc which would not be qualified residence debt Thus part of the debt cancellation could still be taxable or have to be excluded for a different reason i.e. insolvency. It's not always as straightforward as it seems. 3 Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted February 21, 2015 Report Share Posted February 21, 2015 Second cbslee. Make sure you know if it was refinanced and what the refinance funds were for. Other than knowing that information, I agree with the other posters. Tom Newark, CA Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted February 22, 2015 Report Share Posted February 22, 2015 If it was a loan modification, there was no money out. That would negate the need for the modification. This IS as straightforward as it seems. If the house is surety for the loan, it fits. Quote Link to comment Share on other sites More sharing options...
mcb39 Posted February 22, 2015 Report Share Posted February 22, 2015 If it was a loan modification, there was no money out. That would negate the need for the modification. This IS as straightforward as it seems. If the house is surety for the loan, it fits. Mine was a loan modification, clearly spelled out on the first page of the contract. If she had just brought the 1099c in last year, it would have been so much easier. 3 Quote Link to comment Share on other sites More sharing options...
joanmcq Posted February 22, 2015 Report Share Posted February 22, 2015 I have a client that just got a 1099-C for a foreclosure that happened 4 or 5 years ago on her primary residence. Can I still use the exemption on form 982? Quote Link to comment Share on other sites More sharing options...
jshtax Posted February 22, 2015 Report Share Posted February 22, 2015 Joan I think you can since it was debt from their primary residence at the time. From my experience the IRS does not even look at 982s for primary residence. I have only had issues when trying to claim insolvency. While we are on topic of 982 has anyone ever used one for the business real estate exemption? Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted February 22, 2015 Report Share Posted February 22, 2015 I have a client that just got a 1099-C for a foreclosure that happened 4 or 5 years ago on her primary residence. Can I still use the exemption on form 982? Yes 1 Quote Link to comment Share on other sites More sharing options...
KEYWEST_RICKS Posted February 23, 2015 Report Share Posted February 23, 2015 someone came in this week... i have not seen this before..... original loan was 200,000. received a 1099 c for 270,000 of debt cancelled and a 1098 for 70,000 of mortgage interest paid??? no refi or anything like that ....the $200,000 was to purchase the home. but penalties and interest have been added over the last four years. still non tax due to primary residence??????? Quote Link to comment Share on other sites More sharing options...
mcb39 Posted February 23, 2015 Report Share Posted February 23, 2015 I would say Yes, but I would think twice before deducting the $70,000 mtg interest paid. 1 Quote Link to comment Share on other sites More sharing options...
Pacun Posted February 23, 2015 Report Share Posted February 23, 2015 someone came in this week... i have not seen this before..... original loan was 200,000. received a 1099 c for 270,000 of debt cancelled and a 1098 for 70,000 of mortgage interest paid??? no refi or anything like that ....the $200,000 was to purchase the home. but penalties and interest have been added over the last four years. still non tax due to primary residence??????? Report $270K on 982 and do not take any of the $70K on Schedule A or E Quote Link to comment Share on other sites More sharing options...
Lee B Posted February 23, 2015 Report Share Posted February 23, 2015 Joan I think you can since it was debt from their primary residence at the time. From my experience the IRS does not even look at 982s for primary residence. I have only had issues when trying to claim insolvency. While we are on topic of 982 has anyone ever used one for the business real estate exemption? Yes, I had one several years ago. It was a small house that was being rented. It went thru with no questions. Quote Link to comment Share on other sites More sharing options...
FreedomTaxed Posted February 23, 2015 Report Share Posted February 23, 2015 http://www.irs.gov/Individuals/The-Mortgage-Forgiveness-Debt-Relief-Act-and-Debt-Cancellation- "The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief. This provision applies to debt forgiven in calendar years 2007 through 2014. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion does not apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition." Quote Link to comment Share on other sites More sharing options...
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