lydia33 Posted February 5, 2009 Report Share Posted February 5, 2009 I bet we will have this alot...Taxpayer received 1099 A. They filed bankruptcy and let the mortgage company take there house back. Block 2 Bal. of princ. outstanding was $104,000. Block 4 FMV was $74,500. The way I read 1040 Answers it says that it will not be taxed because of the bankruptcy. Do I just not show this anywhere on the tax return? :scratch_head: Quote Link to comment Share on other sites More sharing options...
lydia33 Posted February 5, 2009 Author Report Share Posted February 5, 2009 Please Help! Quote Link to comment Share on other sites More sharing options...
schirallicpa Posted February 5, 2009 Report Share Posted February 5, 2009 check IRS pub 4681, page 7, how to report qualified residence principle indebtedness exclusion. Quote Link to comment Share on other sites More sharing options...
RoyDaleOne Posted February 5, 2009 Report Share Posted February 5, 2009 Try Form 982, I think. http://www.irs.gov/irs/article/0,,id=179073,00.html Quote Link to comment Share on other sites More sharing options...
LindaB Posted February 5, 2009 Report Share Posted February 5, 2009 I bet we will have this alot...Taxpayer received 1099 A. They filed bankruptcy and let the mortgage company take there house back. Block 2 Bal. of princ. outstanding was $104,000. Block 4 FMV was $74,500. The way I read 1040 Answers it says that it will not be taxed because of the bankruptcy. Do I just not show this anywhere on the tax return? Since it's on a 1099-A the mortgage company is not reporting any COD income, so you don't have to do anything with that. Just look at it as if it were a sale of the property. If this was their principal residence, any loss would not be allowed, and if there was a gain, would it be excluded under sec. 121? Since the mortgage company did not include any COD income, you would use the loan outstanding amount of $104,000 as the sale price. Quote Link to comment Share on other sites More sharing options...
LindaB Posted February 5, 2009 Report Share Posted February 5, 2009 Try Form 982, I think. Form 982 is not necessary because COD is only reported on a 1099-C, not a 1099-A. The mortgage company used the 1099-A either because they knew there would be no COD because of the bankruptcy, or because they haven't gotten rid of the house yet. Quote Link to comment Share on other sites More sharing options...
LindaB Posted February 5, 2009 Report Share Posted February 5, 2009 check IRS pub 4681, page 7, how to report qualified residence principle indebtedness exclusion. That part of pub. 4681 is talking about canceled debt, and in this case there is no canceled debt. I think pub. 4681 is fairly new, first put out summer '08, and everyone should print it out and keep it handy. Quote Link to comment Share on other sites More sharing options...
RoyDaleOne Posted February 5, 2009 Report Share Posted February 5, 2009 Good, good... By the way COD on a principal residence is not excluded under Section 121. <---- If that every comes up. Quote Link to comment Share on other sites More sharing options...
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