WITAXLADY Posted March 16, 2015 Report Share Posted March 16, 2015 so taxpayer receives a 1099-A for 7/18/14 box 1 box 2 -balance of outstanding principal - $294,324.53 box 4 - FMV - $179,088.00 Than they have a 1099-C box 1 - date of Identifiable event - 12/31/14 box 2 - Amount of Debt discharged - $115,236.53 box 5 - x'd for debtor personally liable This is not for their personal home but where they were living in 2011 taxpayer lives on $20,000 a year pension and social security. are they insolvent? or is there something else I need to do Thank you for all your help - they are coming in Monday at 10 am. D Quote Link to comment Share on other sites More sharing options...
Margaret CPA in OH Posted March 16, 2015 Report Share Posted March 16, 2015 I think the best thing is to look at the audit guide just posted here recently. From my recent experience and the replies on this board, the 1099A box 2 is essentially the 'selling price' of the property and used to determine gain or loss. The amount in box 2 of the 1099C is considered income but it sounds as if your client is insolvent. I think you use 982 for that. Others will chime in and be better guides but that recent post is great. I also found it on irs.gov by typing in cancellation of debt audit guide. 1 Quote Link to comment Share on other sites More sharing options...
mircpa Posted March 16, 2015 Report Share Posted March 16, 2015 $ 115,237.00 other income 1040 line 21, unless if he can file 982 fitting into any of the attributes. Check if he is eligible for 1d. Quote Link to comment Share on other sites More sharing options...
WITAXLADY Posted March 16, 2015 Author Report Share Posted March 16, 2015 Thank you - after I typed - giving my brain time to talk this thru - I realized 982 was the way to go but sometimes we just need a sounding board - thank you and I will check out that IRS cite. THx again! Quote Link to comment Share on other sites More sharing options...
Pacun Posted March 16, 2015 Report Share Posted March 16, 2015 (edited) You need to report the sale at a loss and that loss is a personal loss so the 3K doesn't kick in. Then 982 should take care of the 1099-C. One thing to keep in mind is that the basis is reduced by $115,236.53 and you could have a profit on the sale of the house which is taxable if they didn't live in the house for 2 years in the last 5 years. Edited March 16, 2015 by Pacun Quote Link to comment Share on other sites More sharing options...
mcb39 Posted March 16, 2015 Report Share Posted March 16, 2015 Thank you - after I typed - giving my brain time to talk this thru - I realized 982 was the way to go but sometimes we just need a sounding board - thank you and I will check out that IRS cite. THx again! I had one of these two years. House was repossessed and clients no longer lived there. Filed 982 for home mortgage and had no further issues. Quote Link to comment Share on other sites More sharing options...
Lion EA Posted March 16, 2015 Report Share Posted March 16, 2015 Lisa Ihm offers great courses on COD, including Forms 1099-A and 1099-C: http://www.lisaihm.com/Contact_Us.html Quote Link to comment Share on other sites More sharing options...
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