David Posted July 6, 2011 Report Share Posted July 6, 2011 I am preparing a client's 2006 tax return. She received a 1099-A that year for the acquisition of her principal residence, which she had lived in for at least 2 years. I thought the IntelliConnect program had prior year tax information but I can't seem to find the 2006 tax law. Can anyone tell me how to find the 2006 ruling for this situation in IntelliConnect? Also, does anyone know the 1099-A will be handled for the 2006 tax year? The 1099-A shows that the borrower was personally liable for repayment of the debt. The principal balance outstanding is $149K and the FMV is $170K. Is the TP liable for any taxes related to the 1099-A? Thanks. Quote Link to comment Share on other sites More sharing options...
Pacun Posted July 6, 2011 Report Share Posted July 6, 2011 I am preparing a client's 2006 tax return. She received a 1099-A that year for the acquisition of her principal residence, which she had lived in for at least 2 years. I thought the IntelliConnect program had prior year tax information but I can't seem to find the 2006 tax law. Can anyone tell me how to find the 2006 ruling for this situation in IntelliConnect? Also, does anyone know the 1099-A will be handled for the 2006 tax year? The 1099-A shows that the borrower was personally liable for repayment of the debt. The principal balance outstanding is $149K and the FMV is $170K. Is the TP liable for any taxes related to the 1099-A? Thanks. The first thing you need to find out is the basis of the house and why she sold/dispossed of it if she lived (as her primary residence) and owned it for less than 2 years within the last 5 years prior to the date on 1099-A. If she lived and owned it for at least 2 years of the last 5 years prior to selling/dispossing of it, she can exclude $250K of the profit or $500K depending on her filing status. If she depreciated the house and has a profit, you will need to recapture. If she has a loss, report the loss as personal loss and do not worry how long she lived there. Keep in mind that if she had 2 loans, you might be looking at the 1099-A for the bigger loan and the second loan could make her basis on the house more than $170k. Quote Link to comment Share on other sites More sharing options...
joanmcq Posted July 8, 2011 Report Share Posted July 8, 2011 I don't understand the question. She received a 1099-A for the accquisition? or disposition. Generally if the FMV is higher than the loan value, there is no COD and therefore no taxable transaction on a pricipal residence. Quote Link to comment Share on other sites More sharing options...
Pacun Posted July 8, 2011 Report Share Posted July 8, 2011 I don't understand the question. She received a 1099-A for the accquisition? or disposition. Generally if the FMV is higher than the loan value, there is no COD and therefore no taxable transaction on a pricipal residence. You still have to report it because the IRS only knows that you got some profit based on the 1099-A. They do not know if that house was your primary residence or if the house was wiped by a tornado and your basis became 0 after the insurance company paid you (you could be selling only the land after the tornado). They also don't know how you put your hands on the house, etc. Quote Link to comment Share on other sites More sharing options...
joanmcq Posted July 9, 2011 Report Share Posted July 9, 2011 Thanks Pacun, I think I misread the OP. Report as sale, but there shouldn't be COD. Might be gain or loss, and neither will likely have a tax effect. Quote Link to comment Share on other sites More sharing options...
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