Reporting Form 1099-A & Form 1099-C
A few weeks ago, I did a blog post titled “You got a Form 1099-C. Now What?” We’re still getting questions on an almost daily basis over there. But it’s gotten a little buried and I want to make sure that information stays accessible. Please post your questions here – I’ll be moving them to this post if any come on the older one too.
Some of the things we’ve discussed: What is the difference between the Form 1099-A and Form 1099-C? The Form 1099-C report cancellation of debt. The Form 1099-A does not report the cancellation. This leads to the question of whether you should report debt forgiveness income from a Form 1099-A. Readers of the blog have reported that the IRS has told them they should and others have been told that they should not (also told by the IRS).
The Form 1099-A is used to report that property was received. Period. It does not say whether the debt was cancelled. If the debt is cancelled, then you get Form 1099-C. If you have property that is both foreclosed on and the debt is cancelled, you’ll get both Form 1099-A and Form 1099-C. If you only get Form 1099-A, that probably means the debt has not been cancelled. Look out. Depending on the state you’re in, the lender may have as long as 4 years to come after you for that debt.
The problem is that many lenders have been merged, bought or otherwise changed and the paperwork is a mess. Plus, the lenders don’t seem to have a good grasp of when to use the right form either.
So what if you don’t get the right form or they’ve used the wrong address to send it to you? One suggestion may be to go ahead and file anyway, assume you’ve gotten the cancellation and then either offset it with a loss in the property (hopefully) or be able to prove why you’re not liable for the tax by filing Form 982.
Got questions? Pleas ask them here.
96 Responses to “Reporting Form 1099-A & Form 1099-C”
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Walter says: “My house foreclosure on 09/092010 and i called the back and confirmed they will be sending me a 1099-A and 1099-C form.
What exatly 1099-C means and 1099-A?
Do i have to filled both when i do my taxes”
The Form 1099-A reports that the bank took back the property. The Form 1099-C shows the cancellation of debt. If this was your primary residence, you probably won’t pay taxes on the debt. Generally, the bank won’t give you a Form 1099-C in that case. If they do and it’s not taxable, you’ll need to complete and include Form 982 with your return so you don’t pay taxes.
There won’t be anything to report from the Form 1099-A.
John says: “I bought a property for 33,000 and took out a loan for 30,000 and paid it for over 10 years and then could no longer pay on it due to the IRS garnishing my wages. I owe 17,000 and cannot pay and the property will be foreclosed.
If the lender sell teh property for 10,000 and takesa 7,000 loss can I offset teh 1099 against what I paid?
33,000 – 17,000 = 13,000 loss + 7,000 debt forgiveness still equals a 6,000 loss?”
If the property is investment only and not ‘put in service’ you could end up with a capital loss. That means the capital loss can only go against capital gains + $3,000.
Worst case, if you had $7K debt forgiveness (ordinary income), you could offset $3K of the loss. Then next year, you take the rest of the loss.
ARM said: “I received a 1099 a in the mail today and
Box 4 is more than box 2.
I don’t know where to report this when doing my taxes.
We have not gotten a 1099 c, but mortgage company and lawyer both said that we are free and clear, we owe nothing to them.
Can you help me?”
If this is a Form 1099-A for your primary residence, there is nothing further you need to do.
Daniel said: “SO glad I came across this website. I’m in the same boat as the other posts up above. The other day, I received a 1099-C for a portion of the loan with my first lender. Box was checked indicating borrow not liable for debt. Today, I received the 1099-A for the remaining portion of the loan and box was checked that borrow is liable for debt. The discharge date for both forms was Mar. 4, 2010. How will the portion on the 1099-A be treated? I read somewhere on the IRS website that both forms need not be reported if boxes 4, 5, and 7 are completed (all boxes were completed on both forms).
However, my name was on title until recently. I found out the condo finally sold and the transaction occurred on Dec. 2, 2010. I have a copy of the deed transaction.
How does this impact the reporting of the information on 1099-A? I plan to use the same CPA firm as last year to assist with this as it is a bit tricky.
Any advice you can provide is greatly appreciated!”
This does seem confusing. Are you sure you did get a Form 1099-C? It sounds like you’re describing a Form 1099-A. Was this a primary residence? If so, you don’t need to report the transaction unless you do get a Form 1099-C.
If this was a real estate investment, you will need to report the disposal.
Generally speaking you won’t get a Form 1099-C until after the sale, otherwise, the lender won’t know exactly how much of a write-off there is.
Julie said: “i received irs 1099-C on a foreclosure home. What can do i need to do to avoid paying huge taxes??? Any advice is greatly appreciated!!”
If this is a primary residence, you may have an exemption. If it’s a rental house, you may have a loss that can be used to offset the income.
Please join us on Sat 2/5/11 for our FREE teleseminar “You Just Got a Form 1099-A (or 1099-C) – Now What?” Sign up at http://www.DianesSeminars.com
Frank says: “I live in AZ. My property got foreclosed in Sep 2010. I had 2 mortgages, one Primary and one Home Equity. I just received a 1099-C for my second mortgage and 1099-A for the primary one. So what does this mean? That only the 2nd one was cancelled but the first is still active? So Do I need to file both forms? Thank you in advance.”
There are different answers depending on whether this is a primary residence or an investment property. If it is a primary residence and the 2nd loan qualifies as acquisition indebtedness. You call it a home equity loan, which strictly speaking means it doesn’t qualify, but you might have unknowingly used that term.
Worst case, the 2nd loan reported on the Form 1099-C is taxable to you unless you declare bankruptcy or are insolvent.
Gary says: “I had a 1st and 2nd mortgage on a home with my wife. We divorced and the home was foreclosed on. My ex-wife filed bankruptcy prior to the foreclosure but I did not. We owed $272K on the 1st and $100K on the 2nd. The house sold at sheriff’s sale for $317K. I recieved a 1099A for the 1st with no cancellation of debt. I am expecting a 1099-C for the 2nd mortgage. How would I handle this cancellation of debt? Do I split it with my ex-wife?”
In this case, you need to go back to the original divorce and look at the property settlement. Who got the house in the divorce? If it’s just you, then all the Form 1099-C COD income is reported on your return. If you need to split it, then you will have to report all of the income and then show your ex’s name and SS# and explain on the return that half should go to her. You definitely will need to make adequate disclosure on your return. You also need to contact the lender to request that they correct the Form 1099-C and report it on two (which some will do).
Susan says: “I received a 2010 1099-C today for cancellation of debt. When I pulled out the two letters (two separate accts, both FIA Card Services) confirming my final payment and canceling the debt, they are dated December 22, 2009. An exact copy of the letters were sent again on January 2, 2010 from a different mailing address. The debt was settled in December 2009. I can remember quite clearly cashing out all my measly life savings to get Bank of America out of my life forever. I didn’t get a 1099-C last year. Honestly, I didn’t think twice about it as it was all new to me. Can they really alter the date and send this to me this year without any recourse?”
If you didn’t report the Cancellation of Debt income (COD income) in 2009, then you will need to report it in 2010. It is taxable to you. If there is a problem with the amount that they wrote off (what you owed less what you paid when you cashed out your expenses), then by all means contact them to correct it. Also, if you meet an exemption due to insolvency or bankruptcy, then file Form 982 and you won’t need to pay the tax.
Oh, and make sure the Form 1099-C amount doesn’t include interest that they accrued. You don’t need to pay tax on that accrued interest.
Lori said: “i live in ohio and filed bankruptcy chapter 7 in 2005 i received a 1099-c box 5 marked from capital one , can they do that after that many years and also it was discharged”
It sounds like you received a Form 1099-C 6 years ago in 2005. Is that correct? If so, you can’t go back and amend. So, keep the paperwork trail in case it’s ever questioned. (We recommend keeping tax records for 10 years)
Diane,
I read somewhere in your answers, you stated that the banks won’t send you 1099-a or 1099-c for debts discharged in Ch 7 as you are not liable for taxes. But what happens if the properties were rental that were discharged. Don’t you have to figure out the gain/loss on disposition of property and for that you need FMV or something from the bank. How do you report a sale for a rental property whose debt is discharged in Ch 7 bk and does not receive 1099-a or 1099-c?
I had a 1st and 2nd mortgage on a house that got foreclosed. I received 2 1099-A. The primary mortgage had a balance of principal outstanding of almost $181K with a FMV of $191K. The 2nd mortgage had a balance of $22K with no FMV. This was not my primary residence at the time of the foreclosure and I did have tenants at one point but not when the house foreclosed. It was my primary residence for about 13 months before I found tenants so I guess it would have been considered an investment property then? What do I do now? Since the FMV was higher then the outstanding balance do I owe anything on it? And what about the 2nd mortgage? Thank you SO much for any help!
I purchased a condo in CA in 2004 and my husband and I lived in it for a year. We relocated and were unable to sell it because the market changed drastically and it was upside down about $100K or more. We rented the condo (with a loss each month of $500+) but finally had to short sell it in May 2010. The condo was purchased for $300k and sold for $90. I received a 1099c (I’m estimating we will be insolvent so not too worried) but also received a 1099a. I am not understanding what i do with the 1099a and how it’s going to effect our taxes. This was rental property so will the 1099a help me or hurt me, generally speaking?
Ricky says: “I had a 1st and 2nd mortgage on a house that got foreclosed. I received 2 1099-A. The primary mortgage had a balance of principal outstanding of almost $181K with a FMV of $191K. The 2nd mortgage had a balance of $22K with no FMV. This was not my primary residence at the time of the foreclosure and I did have tenants at one point but not when the house foreclosed. It was my primary residence for about 13 months before I found tenants so I guess it would have been considered an investment property then? What do I do now? Since the FMV was higher then the outstanding balance do I owe anything on it? And what about the 2nd mortgage? Thank you SO much for any help!”
The first question to sort out is whether this was a rental property or a primary residence. You might have converted it to primary residence if you claimed the interest paid on Schedule A, changed your mail address, voter registration, etc to this address.
If it’s a primary residence, you can’t take a loss upon disposal of the property. There is an exclusion to declaring COD income for mortgage acquisition indebtedness. The 2nd mortgage may or may not qualify for this.
If it’s a rental, you will have offsetting loss (presumably) in the disposal.
Meanwhile, though, you just have Form 1099-As, no Cs, which mean the lender hasn’t hit you with COD income.
Pat says: “I read somewhere in your answers, you stated that the banks won’t send you 1099-a or 1099-c for debts discharged in Ch 7 as you are not liable for taxes. But what happens if the properties were rental that were discharged. Don’t you have to figure out the gain/loss on disposition of property and for that you need FMV or something from the bank. How do you report a sale for a rental property whose debt is discharged in Ch 7 bk and does not receive 1099-a or 1099-c?”
Pat, actually I said that the banks might not send you a Form 1099-C because you’re not liable for the taxes. They should send you a Form 1099-A regardless, but we’re finding that many times they aren’t.
Was your question hypothetical or do you have a fact pattern on what happened to you?
Hi Diane,
In 2006 I purchased an investment property (vacant land) in SC. I live in NY. Due to hardship I stopped paying the mortgage in 2008. During the foreclosure process I hired a SC attorney who was able to have the Deficiency Judgment waived by the bank. Finally in Oct 2010 the foreclosure was completed. Today, I received a 1099A; not a 1099C. If the bank can never pursue the D.J. should they have sent a 1099C? It is my understanding that a 1099A does not mean the debt was cancelled and that the bank can still pursue the D.J. Assuming this is true and I have a definitive “waiver” of D.J. how does this impact me and my tax filing? Do I report the 1099A only and assume that a 1099C isn’t coming? Is it possible that the bank sent a 1099A instead of the 1099C? If the bank knows the D.J. was waived and that they cannot purse the D.J. why not just cancel the debt and send the 1099C? Thanks for any input.
hi, i have a under water investment property in LV and I personally live in California, I have abandoned the property 2 years back but just received the 1099A last week, the 1099A show I still owed BoA $229k, FMV show $259k, so the FMV is over what is owed, do i need to report 1099A for this year return? and will I get the 1099C later?
Hi Dianne,
I live in Ca. My chapter 7 bankruptcy was discharged in aug 2009. I did not reaffirm my loan. I continued living in the house till June 2010 while tryingthe to work with lenders (GMAC and DITECH), in vain, they foreclosed. They first was 240,000 and the second 140,000. I have recieved a 1099-A from both lenders. The balance on principle outstanding is 226,000 and fair market value 244,000 (for the first) and balance outstanding 140,000 and fair market value 00.00 (for the second). What should I do with regards to my taxes (filing jointly), I was hoping that the bk would not require me to pay any gains taxes ( a double wammy)
thnks for your generosity
Ed
——————————————————————————–
I have a few questions…
I moved out of my house in June 2010 when wells Fargo foreclosed it. I haven’t heard anything from them until I received a 1099-a last week. I owned the home with my husband, who I’m now divorced from. Box 2 is-113,781.38 and box 4 is 128,374.68. Box 5 is checked yes.
So, am I going to owe taxes on this property? Will they take my tax check? I haven’t filed bankruptcy yet but plan on it. Also, will they send this form to my ex husband for him to file as well?
I’m concerned because I’ve pretty much lost everything in my divorce and was counting on this tax refund to buy a cheap vehicle since the judge let my ex have our vehicle and he let it get repossessed before it was taken out of my name.
Thanks so much for your help. I’m lost.
Also, in our divorce the judge made no ruling on the home since my ex-husband states he would be filing bankruptcy on everything.
Am I protected my something since this was my primary residence?
I received a 1099c and the SSN was wrong on it. I was told by the person that prepares my tax that because it didnt match my ssn that I did not have to file it even though the debt was canceled. Any advice on whether or not this is true.
Deed in Lieu was agreed to by Mortgage Co & the VA in July 2007 after almost a yr of negotiating, 5 mos of which we continued to pay on the mrtg altho we had been trsf’d to another state, paying for rent where we moved to at same time. We also continued paying the utilities on that house until the paperwork was signed/accepted by Mrtg Co on this VA loan. (Loan was in my husband’s name only (but deed to house (not loan) was changed to include my name shortly after we bought the house in 2004). After not hearing or receiving any ‘finality/ closure’, we contacted the legal team representing the Mrtg/VA & were assured the house was no longer our responsibility, and I also ck’d the county records and saw where the deed was no longer in our name. We didn’t know to expect it but finally received a 1099A in 2009. Strangely, 2 days ago we rec’d a 1098 substitute form in our name for year 2010 (not 2009) showing prop taxes paid! (we will not claim this on our inc tax of course). Then yesterday we rec’d a 1099C, which showed the debt cancelled (box 2) to be $20k more than the bal was when we stopped paying on it, $9k of which was interest; borrower shown to not be liable for repayt of debt. Also, the FMV showed 3 x’s less than the FMV appraised by the VA when we did the D.I.L. This must be the amt they finally sold it for in that greatly depressed housing mrkt. Finally to my question: 1099C rec’d nearly 3 yrs after the d.i.l. was accepted, nearly 4 yrs since we lived in the house, so I am very concerned that we may not be able to take advantage of the forgiven debt tax relief -specifically the ‘qualified primary residence’ factor. Facts Recap: Bought house in Apr 2004, trsfd out Sept 2007, D.I.L. July 2008, date debt cancelled on 1099C is 4/30/2010. Rented a house for nearly 3 yrs in state we were trsfd to. We thought this chapter of our lives was all behind us at this point. It gets a bit more complex here: My mother passed away & left her house to my married daughter & me; we were able to sell it right away & my husband & I bought a (foreclosed)home with our share(on April 1, 2010);no mortgage necessary this time. Ques#1: Going back 5 yrs from the date on 1099C of 04/30/10 wld be 04/30/05 & we left after 4/30/07 (Sept 2007)- so wld that qualify as living there 2 yrs out of the 5 yrs looking back 5 yrs from date of cancelled debt? Also, because we bought a home 04/01/10 after renting 3 yrs (but still lived in rent house til it was repaired/liveable (05/01/10), does that factor in or can that part be ignored in the prim residence factoring? DL/post office changes/etc not changed til May 2010. Sorry so wordy, I err on side of giving too much informaiton (rather than not enough).
Thx in advance for your expertise/opinion on this.
I filed for bankrupcy under Ch. 13 on 4/30/2010. I had a rental property that was forclosed on 4/15/2010 with $128,000 received from the sherriff sale. The recourse mortgage amount at the time of forclosure was $220,000, and I purchased the property for $240,000. My under standing is that I have a loss on sale of $112,000. This I can claim on my 2010 Form 1040, and if I have an NOL carryforward at 1/1/2011, this tax attribute would get reduced at 1/1/2011. Is my understanding correct? Also, the banke issued a Form 1099-A reporting a FMV of $235,000 and a recousre mortgage of $225,000. The FMV reported on the form is clearly not right as the property was sold by the bank to an unrelated third party for $120,000 on 11/30/2010. It appears to me that the bank is calculating the FMV using the mortgage amount plus all other liabilities like unpaid accrued interest, property taxes and attorney fees. Does the bank get any payment from the federal government based on the FMV, and that is way the bank reported this as FMV. What should I do as this FMV is clearly not correct based on the facts?
Diane-
Great resource…this is very generous of you.
I had a home foreclosed in 2010 by the first lender. I got a 1099-A (only) from the second (WF). On the form it clearly says “debt cancelled” with the specific amount, foreclosure details, etc.
Hence, I called WF and asked if the debt was cancelled and the customer service rep I spoke to said yes.
As far as I can tell, one of two things has happened, and both involve a lender mistake. A) The debt is cancelled and they erred in filing a 1099-A vs. a 1099-C. Or B) The debt isn’t actually cancelled and it was a mistake to write “debt cancelled” on the 1099-A and the customer service person erred in telling me what she did.
Given that, and given that they could amend the 1099-A, I’m thinking I should get written confirmation…such as a canceled note.
Not sure there’s a question here, but if you have any thoughts or insight, I’d appreciate it.
Thank you,
Greg
Greg,
One more possible scenario. I have heard of three banks (so far, did not hear that WF was one of them, but they could be now) who have decided that the fed support they received to handle losses from foreclosures meant that they could not then ‘forgive’ borrower debt so that it created tax for them. They had nothing to forgive, the feds stepped in.
It’s created a nice little loophole (in a good way) for borrowers who end up being able to have debt forgiven, but don’t have to pay tax on it.
I wouldn’t press it to hard with Wells Fargo, but I would follow up in writing and say that on such and such day you talked to XYZ and was informed, etc… this letter just serves to memoralize the conversation. If there is any change to this, please contact me immediately at…..
If later down the road, they pursue you, you at least have something you can show them (and the IRS if they ask) that shows you acted in good faith.
James,
I don’t know how federal compensation works for the banks, but I’ve wondered the same thing that you have as I see more and more ridiculous FMV reports.
At this point, the IRS tells us that we have to report the lower of FMV or the loan amount. That means you won’t get a loss on disposal. I’m not sure if we’re going to see some more rulings down the road that change that because there are so many really bad Form 1099-A valuations being given right now.
Sara, you have a very complicated fact pattern and I can’t answer this adequately in an open forum like this. I can give you a couple general guidelines and then suggest you talk to your estate attorney (I think there is an estate issue here, but couldn’t quite figure that out), lawyer and personal accountant on the various issues.
In general, the date of foreclosure will be the date you use to determine whether you had a temporary (less than 2 years) absence from the home.
So Confused,
You do not pay taxes on a Form 1099-A, only if you receive a Form 1099-C. Even if you get a Form 1099-C I don’t think you’ll pay taxes because it looks like you have two of the three possible exemptions:
Personal residence, insolvency, bankruptcy
You only need one exemption. If you do get a Form 1099-C, you’ll need to use a Form 982 to claim the exemption.
Edward,
Even if the bankruptcy didn’t provide the exemption, the principal residency exemption will apply. If you get a Form 1099-C, use Form 982 to use the exemption. Most likely, though, you won’t get a Form 1099-C and there is nothing further for you to do (and no taxes due).
Aaron, you can report the disposal of property on either Form 4797 or Schedule D for this past year based on the Form 1099-A. But since the FMV is higher then the loan, it’ll show as a gain. You do have the option or reporting the loan amount for the disposal price, but that won’t get you anything.
If the FMV is really off, try to contact to lender to get them to change it. Meanwhile, there isn’t a loss that you can currently take. If/when they give you a Form 1099-C, you will need to report it.
Chris, your best bet is to call the lender and ask them your questions. Who knows what goes through their minds sometimes!
Julie says: “I purchased a condo in CA in 2004 and my husband and I lived in it for a year. We relocated and were unable to sell it because the market changed drastically and it was upside down about $100K or more. We rented the condo (with a loss each month of $500+) but finally had to short sell it in May 2010. The condo was purchased for $300k and sold for $90. I received a 1099c (I’m estimating we will be insolvent so not too worried) but also received a 1099a. I am not understanding what i do with the 1099a and how it’s going to effect our taxes. This was rental property so will the 1099a help me or hurt me, generally speaking?”
You will need to report the Form 1099-C COD income on Form 982. The amount of debt forgiveness reduces your basis in the property. But I’m guessing that you may have some additional investment in the property that will still give you a loss. You will need to recapture depreciation and you’ll get to now take the deduction for any suspended losses. This one year where you’ll want some professional tax help.
We received a 1099A after the forclosure of a propety we had (not our primary home, have not received a 1099c … How do we report this. THanks in advance for your advise … we are very confused.
Hi Diane,
I did a short sale on my house (primary residence) in Las Vegas last year. I have received a 1099-C from the second mortgage holder but not from the first mortgage holder (WF). My realtor who handled the sale says the lenders do not always send them out. The agreement for the short sale said WF waived any deficiency rights. Should I report the debt deficiency from WF on form 982 as cancelled anyway? I would be insolvent to the degree that it would cover both the first and second mortgages debt cancellation. Should I claim the first mortgage using the primary residence exemption and the second using the insolvency exemption or claim everything under the insolvency exemption?
Fernando, only report the one Form 1099-C that you received. If it qualifies for the primary residence exclusion, use that exclusion when you file Form 982.
Andres says: “We received a 1099A after the forclosure of a propety we had (not our primary home, have not received a 1099c … How do we report this. THanks in advance for your advise … we are very confused.”
Take a look at past blog posts and comments. You’re not alone with this question!
The Form 1099-A is used to report the disposal of the property. The Form 1099-C is used to report COD (cancellation of debt) income. At this point, you just have the disposal of the property, not any COD income.
Count me in as completely lost as to what to do. We filed BK in 2009 our home was included and was foreclosed on in April 2010. We received a form 1099-a and I really don’t get how to report it on our taxes. I called the mortgage company, and they said we will not be getting a 1099-c. I’ve called the IRS (3 phone calls and 2 1/2 hours of time) for guidance with alot of conflicting advice on how to report it.
We refinanced the house in 2005 and also have a second mortgage, but didn’t receive a 1099-a or 1099-c from them. The 1099-a we got from the first mortgage shows the FMV as more than the loan amount (there is no way that the amount is correct either), so am I correct that it shows we made money? We bought the home in 2001, and during that time we did rent the house out for a year from 2005-2006 while we lived out of state, so I have also been told that we will have to put the depreciation amount taken during that period on our taxes and pay that back somehow? I’m completely lost, can you tell?
The IRS is telling me to familiarize myself with publication 523 and report the foreclosure as a sale. There is alot of conflicting information online and on Turbo Tax (where I am trying to do my taxes) that says the 1099-a is a non-event and to wait to report anything until you get a 1099-c.
Diane,
We received a 1099-c on a vacation home we walked away from. Box 5, “was borrower personally liable for repayment of the debt” is marked “no”. Does this have any impact on whether this cancellation of debt is considered taxable income? Do we still have to report it? Also, if we complete form 982 claiming insolvency, do we have to attach a financial statement supporting it?
Thanks for your help!
Hi Diane
ok, so here is my dilemma. My wife and I bought a duplex in 07 (washington state). We lived in one apartment for twelve months and then moved to az and rented it out full time. In march of 10 we did a deed in lieu of foreclosure because it was too difficult to maintain from distance and an added stress. the lender was my mom and she loaned us the money. So should she send me a 1098 a or C? she doesn’t expect any money from us and we had made payments promptly. We basically just gave it back and she took over the title.
also how do I tell if i had a loss or not? the house hadnt lost much in value.
Thank you
I am in active Ch 13 Bk, to stop foreclosure. My plan was confirmed in March 2010, (I filed ch 13 Bk in October 2008). I was paying in Attorney escrow account for mortgage to the bank whole 2009 and 2 month of 2008. After my plan was confirmed in the bankruptcy court, I was ordered by the judge to pay directly to the bank. In December 2010 I started to call to the Bank about 1098- will I receive it or not? because I paid about $75,000 in 2010 to the bank for mortgage.
The bank promised that I will receieve the 1098.
I called again in January 2011, every week to remind to them about it.
EVery time I called to the bank, I was told that :Yes, it is on its way.
And that according to their records 109 8 was mailed to me on 31 Jan 2011.
from Wells Fargo bank.
Then on 15 February 2011 when I still did not receive anything, I called to the Bank and ask if they indeed mailed it. The clerk answered and said that yes, they mailed it to me with $ 0.00 payments made for 2010.
Because I am in active Bankruptcy chapter 13, the bank does not need and is not required to issue 1098 even if I paid $75,000.
But the IRS said to me today that 1098 is not required to be attached to 1040.
It is so very complicated.
why Bank is acting like this? if anybody can help with advice I will appreciate it.
Thank you.
Chris says: “We received a 1099-c on a vacation home we walked away from. Box 5, “was borrower personally liable for repayment of the debt” is marked “no”. Does this have any impact on whether this cancellation of debt is considered taxable income? Do we still have to report it? Also, if we complete form 982 claiming insolvency, do we have to attach a financial statement supporting it?”
RE: Form 1099-C. The ‘no’ has nothing to do with the COD income. If it had been a rental or investment property, it could impact how you reported the disposal. Unfortunately, since it’s a vacation home, you can’t take any loss on the disposal.
RE: Form 982. This form is tricky. There are instructions that go along with it, but I’d really recommend that you get a tax pro to help you.
Olga, I’m sorry this is happening to you. Banks/lenders are uncooperative to everybody these days it seems.
You probably will need to calculate the amount of mortgage interest that you paid for the property in the year, in order to properly report it on your return.
You do not attach Form 1098s to your return, so the IRS is correct in what they told you.
So Lost says: “Count me in as completely lost as to what to do. We filed BK in 2009 our home was included and was foreclosed on in April 2010. We received a form 1099-a and I really don’t get how to report it on our taxes. I called the mortgage company, and they said we will not be getting a 1099-c. I’ve called the IRS (3 phone calls and 2 1/2 hours of time) for guidance with alot of conflicting advice on how to report it.
We refinanced the house in 2005 and also have a second mortgage, but didn’t receive a 1099-a or 1099-c from them. The 1099-a we got from the first mortgage shows the FMV as more than the loan amount (there is no way that the amount is correct either), so am I correct that it shows we made money? We bought the home in 2001, and during that time we did rent the house out for a year from 2005-2006 while we lived out of state, so I have also been told that we will have to put the depreciation amount taken during that period on our taxes and pay that back somehow? I’m completely lost, can you tell?
The IRS is telling me to familiarize myself with publication 523 and report the foreclosure as a sale. There is alot of conflicting information online and on Turbo Tax (where I am trying to do my taxes) that says the 1099-a is a non-event and to wait to report anything until you get a 1099-c.”
If this was your primary residence, there is nothing to report. If it’s a rental property, then yes, you will need to report it.
If you don’t get a Form 1099-C, there is nothing further for you to do. If you do get the Form 1099-C, you will get an exclusion for (1) primary residence if it qualifies for the indebtedness, (2) insolvency (if applicable) or (3) bankruptcy if the debt was discharged in the indebtedness.
William says: “ok, so here is my dilemma. My wife and I bought a duplex in 07 (washington state). We lived in one apartment for twelve months and then moved to az and rented it out full time. In march of 10 we did a deed in lieu of foreclosure because it was too difficult to maintain from distance and an added stress. the lender was my mom and she loaned us the money. So should she send me a 1098 a or C? she doesn’t expect any money from us and we had made payments promptly. We basically just gave it back and she took over the title.
also how do I tell if i had a loss or not? the house hadnt lost much in value.”
If you made payments in 2010 and there was interest associated with them, your mom should prepare a Form 1098 to report the interest paid. If your mom is writing off the loan as a bad debt, then she should prepare a Form 1099-C. Otherwise, if she just took the property back, there is no cancellation of debt income and so she doesn’t need to do a Form 1099-C (I suspect that’s what the situation is in your case)
Diane,
Thanks for the response. After posting my question for you I did some further research and found on the IRS website (http://www.irs.gov/newsroom/article/0,,id=174034,00.html) where it says “Non-recourse loans: A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral. That is, the lender cannot pursue you personally in case of default. Forgiveness of a non-recourse loan resulting from a foreclosure does not result in cancellation of debt income.” We live in a non-recourse state, so I believe box 5 does have to do with COD income, as it reflects that our loan was a non-recourse loan.
Thanks
I’m sorry, I’m still confused! We didn’t get a 1099-c, so does that mean we don’t do anything? It was our primary residence, but we did rent it out for about a year during 2005-2006. So do I have to report it, or is it still considered a primary residence? We bought it in 2001, and lived in it for most of that time. It was discharged in the bankruptcy. Thanks for your help!
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