jog Posted March 1, 2008 Report Share Posted March 1, 2008 I have a client who lost his home because he couldn't pay for it. I'm thinking this debt relief act would help him. The instructions for this form is not too clear. Should I file the return without showing the income from the foreclosure and attach the form 982. Not sure how this would work. Any help will be appreciated. Quote Link to comment Share on other sites More sharing options...
lbbwest Posted March 1, 2008 Report Share Posted March 1, 2008 I have a client who lost his home because he couldn't pay for it. I'm thinking this debt relief act would help him. The instructions for this form is not too clear. Should I file the return without showing the income from the foreclosure and attach the form 982. Not sure how this would work. Any help will be appreciated. What year was he foreclosed in? I know it's not always the CORRECT response, but I have a tendancy to "follow the form." Find out if he was sent a 1099 of any kind before you proceed. lbb Quote Link to comment Share on other sites More sharing options...
Pacun Posted March 1, 2008 Report Share Posted March 1, 2008 I think most banks have not forgiven any debt yet. I think form 982 will be very useful next year. Quote Link to comment Share on other sites More sharing options...
jog Posted March 2, 2008 Author Report Share Posted March 2, 2008 I think most banks have not forgiven any debt yet. I think form 982 will be very useful next year. This young man was given a 1099-A with a date of lender's acquisition of 10/17/07. Balance of principal outstanding $39,000, with a fair market value of property of $21,000. At first I thought he would have income of $18,000 but what instructions the form 982 has made me think this difference could be forgiven. Anyone have thoughts on this? Quote Link to comment Share on other sites More sharing options...
jainen Posted March 2, 2008 Report Share Posted March 2, 2008 >>a fair market value of property of $21,000<< Was this in 1975 or was he living in his pickup truck? Frankly it sounds like something in a textbook. Well, anyway, 1099-A does not mean any debt was cancelled. Quote Link to comment Share on other sites More sharing options...
Pacun Posted March 2, 2008 Report Share Posted March 2, 2008 Let me put it this way. Banks have not forgiven most of the debts yet. 1099A means nothing at this point. Banks do not know how much they will forgive and how much they will collect from some of these people. As a matter of fact they don't know how much they will forgive for two reason 1.- They do not know if these people have other assets. 2.- They do not know how much of the debt they will collect back when they sell the house again. When the bank issues a 1099-A, the bank is only saying, "I am buying this house back from the greedy run-away home onwer. Later this year, next year or whenever I sell this property and I know how much I will forgive this looser, I will issue him a 1099-C." On August 2007, a bank gave a client of mine a 1099-A purchasing the house back for $355K, the debt was $380K. The house is on the market right now for $280K. I told my client to expect a 1099-C for at least $100K this or next year. Rental and personal second home owners that just lost 2 or more houses will have headakes next filing season if a court didn't declare them bankcrupted. Quote Link to comment Share on other sites More sharing options...
jog Posted March 2, 2008 Author Report Share Posted March 2, 2008 Do you mean that the 1099-A doesn't mean that he has to include the difference as income for this year? That he will more than likely receive a 1099-C at a later date. I don't get many of this sort of thing so I am unsure of how to proceed. Thanks to all of you who have answered. JOG Quote Link to comment Share on other sites More sharing options...
Pacun Posted March 3, 2008 Report Share Posted March 3, 2008 1099-A means a sale. If you made a profit on the sale, you have to report it. If you have a loss on rental or investment you take, if not.... It means nothing, except that for matching porpuses you have to file Sch-D if appropriated. Quote Link to comment Share on other sites More sharing options...
Janitor Bob Posted March 3, 2008 Report Share Posted March 3, 2008 1099-A means a sale. If you made a profit on the sale, you have to report it. If you have a loss on rental or investment you take, if not.... It means nothing, except that for matching porpuses you have to file Sch-D if appropriated. FYI....I personally have received 4 1099-Cs so far this year for debt forgave in 2007 Quote Link to comment Share on other sites More sharing options...
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