ljwalters Posted March 4, 2011 Report Share Posted March 4, 2011 Same old story client lost home. received both 1099 A and 1099C. The 1099A box 5 liable for repayment of debt is checked yes. Fair market value lower then balance. The 1099C has the correct amount loan less fair market, but the box 5 indicates not liable for dept (checked NO) Do I not use the 1099C Linda and buddy Quote Link to comment Share on other sites More sharing options...
Pacun Posted March 4, 2011 Report Share Posted March 4, 2011 Same old story client lost home. received both 1099 A and 1099C. The 1099A box 5 liable for repayment of debt is checked yes. Fair market value lower then balance. The 1099C has the correct amount loan less fair market, but the box 5 indicates not liable for dept (checked NO) Do I not use the 1099C Linda and buddy Once they issue you a 1099C, you were forgiven a debt, period. If it was their primary residence, they will not have to pay taxes but it needs reporting. Quote Link to comment Share on other sites More sharing options...
ljwalters Posted March 4, 2011 Author Report Share Posted March 4, 2011 It was primary residence but it was never refinanced so it sould have been a nonrecorse loan. Linda and buddy Quote Link to comment Share on other sites More sharing options...
Pacun Posted March 4, 2011 Report Share Posted March 4, 2011 It was primary residence but it was never refinanced so it sould have been a nonrecorse loan. Linda and buddy Are you doing her taxes? If a client presents you a 1099-C, your client had cancellation of debt and you have to deal with it on their taxes. Quote Link to comment Share on other sites More sharing options...
Maribeth Posted March 5, 2011 Report Share Posted March 5, 2011 Linda, Your client has sold her house back to the bank for the amount of the loan balance. If she has never refinanced the home, then the loan is most probably non-recourse. Banks routinely mess up the preparing of the 1099-A and the 1099-C and I never, ever accept what is on those forms without checking the numbers and answers out. I would simply report the sale of the residence on Schedule D, take the §121 exclusion and move on. Maribeth Quote Link to comment Share on other sites More sharing options...
MAMalody Posted March 6, 2011 Report Share Posted March 6, 2011 How would you handle it if you received a 1099-C but no 1099-A? Quote Link to comment Share on other sites More sharing options...
Pacun Posted March 6, 2011 Report Share Posted March 6, 2011 How would you handle it if you received a 1099-C but no 1099-A? You ask for the basis for the FMV of the house and you add the cancellation of debt. That will give you amount of what the client owed which is normally presented on the 1099-A. Remember that the IRS is more interested on the 1099-C than the 1099-A. Quote Link to comment Share on other sites More sharing options...
MAMalody Posted March 7, 2011 Report Share Posted March 7, 2011 Hmmm. I have not had to deal with one of these before. I probably need to look into it more closely, considering the times we are in. This is probably the year that I will get one or the other. Quote Link to comment Share on other sites More sharing options...
ljwalters Posted March 7, 2011 Author Report Share Posted March 7, 2011 Yes it is a client. I know he has never refinanced, because I have been doing his taxes since he purchased the home. The strange part to me was that the 1099C said not responsible for debt. But, the 1099A said he was responsible. Why would that be? I have about 6 of these this year and thought this would be the easy one. 1 a short sale and 2 foreclosures and 2 bankrupts. And I have a very small practice (less than 100 clients). Linda and buddy Quote Link to comment Share on other sites More sharing options...
GOIN CRAZY Posted April 8, 2011 Report Share Posted April 8, 2011 I need help - I have been to 3 cpas in the last month with three different answers - hoping you can match at least one of them: Similar situations as above: Husband had a rental property (actually 4 but lets just deal with this one for now) and that property was included in a bankruptcy discharged in 2009. He had no activity in the rental after the discharge. Property was forclosed in 2010 - not necessarily sold - just received the 1099a for 2010. Did not receive a 1099c. Is this the solution: Claim loss on 4797 for 2010 return, wait until a 1099c is issued and then deal with the 1099c if and when it is issued? If it is issued, because of his Chapter 7 (Part of Title 11 bankruptcy) could he use form 982 Line 1a to offset the income for the cancellation of debt? I also have heard that if the 1099c is issued to amend the 2010 return form 4797 to adjust the basis? What is a 1099c is never issued? PLEASE HELP! Quote Link to comment Share on other sites More sharing options...
Pacun Posted April 8, 2011 Report Share Posted April 8, 2011 I need help - I have been to 3 cpas in the last month with three different answers - hoping you can match at least one of them: Similar situations as above: Husband had a rental property (actually 4 but lets just deal with this one for now) and that property was included in a bankruptcy discharged in 2009. He had no activity in the rental after the discharge. Property was forclosed in 2010 - not necessarily sold - just received the 1099a for 2010. Did not receive a 1099c. Is this the solution: Claim loss on 4797 for 2010 return, wait until a 1099c is issued and then deal with the 1099c if and when it is issued? If it is issued, because of his Chapter 7 (Part of Title 11 bankruptcy) could he use form 982 Line 1a to offset the income for the cancellation of debt? I also have heard that if the 1099c is issued to amend the 2010 return form 4797 to adjust the basis? What is a 1099c is never issued? PLEASE HELP! What makes you think that we can give you better information than those CPAs who sat with you and checked the papers? In any event, you will be double dipping if you do that. Why don't you list what each of the 3 CPAs said and we are going to support the one with the most logic. Quote Link to comment Share on other sites More sharing options...
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