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”
Follow us on Twitter!
How to Calculate ROI for Real Estate Investments http://t.co/uOA89vKd
Less than 1 minute agoHow to Calculate ROI for Real Estate Investments http://t.co/BUYeu61I
5 hours ago.How to Calculate ROI for Real Estate Investments http://t.co/G8QSUL75
11 hours ago.Friend us on Facebook!
Copyright © 2012 US TaxAid Services, LLC. All Rights Reserved.
I have received the 1099c last tax season, and this year i received the 1099a. Im in california. Does that mean i dont have to do anything with the 1099a in filing for this year?
Julie, this doesn’t seem right. Is the Form 1099-C the same loan? The Form 1099-C should be the end of it. Is it possible that the next year (this year) Form 1099-A is for another loan on the same property? Otherwise, call the lender and find out why they gave you a second form. If wrong, make them correct it.
Thanks for replying. It’s for the same loan, all info are the same, the only difference is one is C and the other is A and i got them 1 year apart. My accountant got confused too, she said its complicated. Im
trying to do reseach on this too so i can understand it.
I received a 1099-A for tax year 2009, but no 1099-C. I’m assuming the bank will want to come after me for deficiency since the FMV (Box 4) is much less than Box 2. Plus, this was for an investment property that was foreclosed. My question is what do I do with the information on the 1099-A? One tax pro said I can write it off as a Capital Gains Loss on a Schedule D since it was on an investment property. She also suggested I contact the bank and ask if they will forgive any of the debt. I seriously doubt it since I haven’t received a 1099-C yet, and the bank has since been bought out by another bank.
So, should I include the 1099-A info on a Schedule D, or just not even report it on my return this year? Thank you whole heartedly for your help in advance.
i have same problem as Joe ..will you please reply his question n concern.
thank you.
Hi Joe & Sam, I wish I had a definitive answer for both of you.
Let me answer it with an example. In California, there are lawsuits breaking out all over because lenders have take the position that they can go after former property owners. But the property owners have take the position that because of the type of contract, and California law, that the lender can not.
I’m not a lawyer and so I want to be really clear that I can’t give legal advice here. From the lawyers I’ve talked it, it seems that the former property owners have a very good argument. We have to wait for the courts to sort it out.
But that meanwhile leaves these property owners in a limbo. What do they do? We are taking the position that they should report this as COD income, even though all that they received was a Form 1099-A (not a Form 1099-C.
If you have a loss from the disposal of an investment property, by all means report it on Schedule D or Form 4797 (depending on the property type). You can’t deduct the loss on a principal residence.
Hi Diane. We gave 2 vacant lots back to the bank in 2009. After 2 years we could not get them sold. We worked with the bank and did a Deed in Lieu of Foreclosure, and kept our payments up through the process. Before the closing we received a letter on both lots saying we owed $0 on each, a month later we closed & received a Warranty Deed in Lieu of Foreclosure for each lot. They did tell me I would be receiving a 1099 on each property at the end of the year. I received a 1099-A for each lot. Lot 1 – $23,145.54 Balance of Principal Outstanding & $48,000 FMV (bought for $29,500). Lot 2 – $17,770.67 Balance of Principal Outstanding & $18,000 FMV (bought for $23,000). I don’t know where or how to record this on my taxes. I looked at the Sch. D, but it doesn’t really seem to work right for this situation. At first I was under the impression I had to claim as income a gain of the difference of FMV (like I sold it at a profit) and either my loan balance or what I bought the lot for. But I found a Worksheet on page 5 of Publication 544, which seems to tell me otherwise, that I have a loss. Either way I don’t know how or where to record this on my taxes – don’t know if I have a gain or loss. I’m pretty good at this stuff and doing my own taxes but this situation has me stumped. I would so greatly appreciate your help. Thank you.
Hi Christine:
You do need to report this on Schedule D. On Lot 1, basis is $29,500 (plus any other capitalized costs), sales price is 23,145.54 – You will have a loss on the sale. It sounds like they expect to sell the property for profit, so there will be no cancellation of debt income.
Lot 2, basis is $23,000 plus any other capitalized costs and sales price is $17,770.67.
Thank you Diane. So I don’t have to do anything with the Fair Market Value the bank put on the 1099-A forms? As they are expecting to sell it for more than what I owed? That was confusing me. I was thinking I might have to claim $48,000 and $18,000 as the sales price. So what your saying is I claim the Balance of Principle Outstanding as the sales price. What did you mean there will be no cancellation of debt income? Also, if the bank ends up selling the lots for less than what I owed, will they or can they come back at me in some way? I was thinking I was protected as we worked with them to do the Deeds In Lieu of Foreclosure. Thanks again for your help.
Christine, If the property sells for more than you owe, than the bank will make money. That means they don’t have to write off your debt (cancellation of debt) and there will be no taxable income to you.
If the bank sells for less than you owe on the property, they will either come after you for the difference or they will write it off (which means you have taxable income).
Diane,
My spouse and I each own a condo located in our former home State(formerly each of our primary residences prior to marriage – neither of us is liable for the others mortgage note). We moved out over 2 1/2 years ago due to job loss and moved to another State. One property became a second home and we couldn’t sell it, the other became rental property. We unfortunately met with additional lay-offs and were unable to keep up with either mortgage as of 10/09, as we had to continue pay our rent in our new home State. The second home finally came under short-sale contract (temporarily ceasing the pending foreclosure) and is taking some time to process, as expected. The other property continues to linger in lender’s black hole. In the process we have become what would be considered insolvent and have considered filing for BK. My thought is if we can earn sufficient income to keep up with our non-RE debt, is it really necessary to file BK since we are insolvent (and will be for some time as we dig out) and should not have to pay income tax in the event of debt forgiveness on either condo. If they should decide to sue us for deficiency on either property, we could always negotiate down further or file BK then. What is your opinion? Should they accept the short-sale and then issue 1099-C on either property and should we not be able to prove insolvency through form 982, or my bigger fear is we will have we lost our ability to file BK and discharge those taxes owed since the forgiveness of debt (short-sale) will have occurred pre-filing and prior to BK discharge? Are we better off allowing them to go to foreclosure and prove insolvency in the instance 1099c’s are issued and if they aren’t, I am certain we maintain our right to discharge through a BK if they sue. Please advise
Thank you
Hello,
I have a 1099-A for business property abandonment – I have calculated the gain that would be recognized…however I’m confused as to whether it needs to be reported at this point, since they have not actually canceled the debt….
If it is taxable at the time of receiving a 1099-A, then what happens if they don’t cancel the debt and you end up still needing to pay the remainder of the loan? How is this interest & principle taken into account for tax purposes?
Very confusing to me…as is all IRS laws…:)
Michael, first off, I strongly recommend you talk to an attorney in your home state. You need to know what the rules are for deficiency judgements (ie, can the lender come after you?), plus want to make sure that you are properly prepared to BK if that’s the choice you make.
In general, though, if you qualify for insolvency, the debt forgiveness will not be subject to federal income tax.
Check out the 6/23/10 blog post on http://www.USTaxAid.com on the states that are now taxing debt forgiveness, even if there is insolvency. You don’t want to get caught by surprise with state tax.
The Form 1099-A is puzzling because the lenders often aren’t following the rules! If you have a bankruptcy, they do not need to give you a Form 1099-C even though the debt has been forgiven. They might do so anyway… And if you have a principal residence with debt forgiveness, you may not get a Form 1099-C either.
If you believe that the debt is forgiven and they can’t come after you (due to state law), report the sale.
If they later come after you with a default judgment and you pay it, you then report the loss on the property.
Diane, is there anymore on the deficiency laws with a 1099A, i got one last year and paid taxes on it in for 2009. 6 months ago or so..now i just recieved a letter from a collection agency for the $125,000 that i had already paid taxes on. They’re killing me, or at least kicking me when im down. any advice of what to do with this collection agency?
My husband and I filed bankruptcy in Sept 2008, it was discharged in Dec 2008. In February 2009, I received a 1099-A ( Our mortgage was included in bankruptcy, had to go through foreclosure, etc) The house FINALLY sold in March 2010, I am assuming that I am going to be receiving a 1099-C for this tax year, are we going to be taxed on the difference of the sale or are we safe since the debt was discharged?
Diane,
My in-laws took out 200k out of their primary home in order to buy a new home in 2005. Then they turned around and rented out the original primary home, which now is being foreclosed on. They have been renting it out for 5 years and the renters have gone under and it has become a financial burden for them. They can’t sell because the property is upside down. Their primary home that they used the 200k is also upside down but they were able to modify the payment. They are on Social Security income only, they do not have any assets or retirement, other than the SS income they receive… will they be able to claim insolvency on the foreclosed property? By the way, these properties are in California.
Hello,
I have a concern about a property that I short sold last year in California. I’m 29 years old and sold my second house after going a divorce, we ended up agreeing to sell the property. There was a first and a second loan on the property, after filling out all the paperwork the house was sold in a short sale, with both lenders being Chase. A couple of months past and they sent me a 1099-c one for the first loan, and another 1099-c for the second. I filed as insolvent in 09 now a year later I receive a call from a collections agency saying that I owe the full amount of 146k that was still my debt to pay to Chase. My question is can the lender come after you for a debt that was forgiven and that they sent you a 1099-c form for and have paid taxes on. I’m really confused as to why a year later they would come after me if on my credit report that loan states it was closed and that I owe Zero dollars on.
I could really use your professional advice in this matter, and any advice would be greatly received.
Lupe, most likely your in-laws will be able to claim the insolvency exemption and the COD (cancellation of debt) income will not be subject to federal tax. The state laws are rapidly changing and so this is something they will want to check on specifically. Does CA give the same exemption at the time that the forgiveness occurs? Reminder that you need to file Form 982 with the tax return to get the insolvency exemption.
Mel,
Wow, I hadn’t heard of a story like yours. It doesn’t make any sense. The form 1099-Cs that you received means that the debt was cancelled…hence the Cancellation of Debt income.
But if they now come back and say you still owe the debt, then that means the debt wasn’t cancelled.
I’d call the collection agency first and tell them you have proof that the debt was cancelled and see if they give you any insight. Then I think you might need to get a lawyer involved.
This is definitely not right.
Shawna,
We’re seeing that many mortgage companies are NOT issuing Form 1099-Cs when there has been a bankruptcy. They aren’t required to in that case because as you said, the Cancellation of Debt income would be non taxable anyway.
Mark,
The Form 1099-A reports that the lender has taken back the property. The Form 1099-C is the form that actually acknowledges that they have cancelled the debt. So, it’s possible it was never forgiven. Definitely talk to your accountant and your attorney right away to make sure you didn’t pay tax on something you didn’t need to.
I got a 1099A Dated 1/30/09 I was in BK (Chapt. 7) at the time which wasn’t fully discharged until 9/23/09 This 1099a was for an investment property…
How is this going to affect my 09 taxes… Box 2 128,800 and Box 4 60,000
Box 5 Check NO..
Can anyone help me with this ? Am I liable for taxes on the difference amount ?
I also understand the insolvency thing…. Well If I were in BK that means My debts exceeded my assets anyway or I wouldn’t be in Chapt. 7 BK..
How is this going to affect me… I just want to make sure it isn’t considered income to me….
Thanks
Vern
Correction… BK was discharged in 2/23/09 from my prior post…. so roughly a month after 1099a was issued…
Hello Diane,
I bought a piece of land a few years ago and had the mortgage, deed, etc, written up in the name of a single asset LLC, of which I’m the sole sharehoder, (I formed the LLC just for that land purchase). A few years have passed and things have gone bad financially for me. The bank has agreed to a short sale for a lot less than what I owe them. Being that everything is in the name of the LLC (even though my name and signature do appear on the last page of the mortgage). I would obviously declare bankruptcy for the LLC. My question is, would the LLC’s bankruptcy exclude me from having to pay taxes on the debt cancellation/forgiveness by the bank. Would I file for the LLC’s bankruptcy ASAP or after the closing, i.e., after the 1099 is issued? Does it matter? The bank has said they will issue a 1099. Maybe I need to make sure that they know that the sale/deal would be between the buyer and the LLC (not between the buyer and me personally, so that they issue the 1099 in the name of the LLC.
Thanks for your help,
Larry
I’m a co-borrower on a commercial mortgage to a LLC which owns a rental office condo in which I am a 49% owner.
The mortgage is in default, due to lost tenants. The loan was sold at auction to another bank, which is now discussing with me options to settle my obligation as co-borrower. The new bank wants to take deeds in lieu which I have no problem with. My question is what will be the basis for determination of COD income? Is it (a)the net carrying value of the loan in the hands of the new owner (which obviously purchased it at a discount)or (b)the original mortgage balance compared with fair market value? by the way,an appraisal was done by the original bank in Q4 2009 and it exceeded the loan balance. How will the new owner determine FMV and how can it be anything other than what they paid just paid for it? If that’s the case, the net carrying value and FMV are the same and their is no COD income, correct?
Thanks
Bob
Diane,
We are currently in the process of a deed in lieu of foreclosure. Not sure if we will be getting and 1099 A or C or both. Original mortgage was for $199,900 and current amount owed is 196,970. House currently appraises at 125,000. We have not lived in the house for over 2 years so is it still considered a principal residence (we are renting)?
Taxable income for 2010 is 16,000 (yes, that is correct).
I know we will need to file form 982 but trying to figure that out is completely confusing. What amounts are considered discharged indebtness? Would filing for insolvency be easier or better than filing as principay residence?
Any assistance would be appreciated.
Vern, sorry, I just saw your comments here. Hopefully by now you’ve filed your 2009 tax return and discovered that you needed to use Form 982 to use the bankruptcy exemption on any COD income. However, it sounds like you just received a Form 1099-A and NOT a Form 1099-C. If that’s the case, then there is no COD income to deal with on the 2009 return. You may have a loss if the property was an investment or rental property.
Bob,
The 1099-C gets a little complicated when there are co-borrowers. The lender will probably issue you both Form 1099-Cs for the full amount. You and your co-borrower need to sort out how you handle that (maybe both take pro-rata portion?) Since it was a commercial property there is also presumably a loss on the property that will likely more than offset the COD income.
So, to put numbers on this: Let’s say the property has a basis of $1.3 mill and a loan of $1 mill. The FMV today is $800K. The bank is doing a deed-in-lieu of and forgiving the rest of the debt. You will have a loss of $500K ($1.3 mill – $800 K) and COD of $200K. Of course, this doesn’t take into account recaptured depreciation or suspended losses, both of which count. But, generally, in theory if you haven’t done a cash out refi or financed initially at greater than 100%, you have a loss that will take care of COD income.
As far as the buyer, they get whatever they paid for the property as their basis (unless they are doing a like kind exchange). Your discharge will have nothing to do with their basis.
Janadean,
If you are otherwise filing for insolvency, then you will need to claim insolvency exemption, not principal residence. That’s part of the pretty complicated rules with Form 982.
The fact that you have been out of the house for so long could be relevant. You need to be able to prove you lived in it for 2 out of the previous 5 years. If you can not, then this may count as a 2nd residence and you do NOT want that tax treatment. (No exemption and no ability to take a loss)
I can tell you what should happen with the forms, but heaven only knows whether the lenders will comply. They seem to be doing whatever they feel like it when it comes to Form 1099-As and Form 1099-Cs.
Hello.
I filed for bankruptcy in sept 2008 and discharged in November 2008. Today I just received a 1099-c from citibank showing the amount cancelled and the date it was discharged ( same date as bankruptcy discharge). The bankruptcy option was not checked off.
Do I just ignore it or call the IRS and notify them that it is a mistake on the debtors behalf? Thanks.
Hi,
My husband and I bought a home in 2002 that wound up with Countrywide as the lender. We were on a 6% fixed rate loan that included our taxes and insurance, but they kept trying to raise our monthly payment. I’d call them, remind them about the fixed rate loan, etc., but it would resurface a month or so later. Then the nightmare really began. They paid someone else’s property tax out of our escrow in 2004, but we had no idea until Jan. 2006 when they wanted to raise our house payment an additional $300/month. So many calls! It wasn’t until July ’06 we learned about their error – and that was through one of their employees. It sounded easy to fix, right? Not with them. They wouldn’t admit the error. We were receiving letters of Default and Acceleration. I’d send a letter stating the error (found out it was because THEY didn’t pay our property taxes in ’04 and ’05, so they said our taxes ‘doubled.’). The ugly letters would stop, then I’d get one saying we were behind in escrow and the amount varied month to month – from $800 up to $1,800. The monthly house payment was usually fluctuating too. We fought this until in spring ’09 Bank of America entered the picture – I couldn’t believe the mess got worse. They (BOA) said they weren’t looking back into any records of CW and accepted them as accurate. By Aug. BOA took our house. We received no letters regarding if it’d sold at auction, etc., until Mar. 2010 when I received a 1099-A form. I couldn’t seem to find a tax person that knew what to do with our mess, so we filed for an extension – the first we’ve ever done. Found out in Aug. that BOA sold the house in Feb. The amount on the 1099-A was about $8,000 more than we owed on the loan. If it were accurate, then the new sale would’ve been just $3,000 less than the loan amount. We put down $28,000 on the house and can’t believe the banks don’t have to verify their info, that they can just take a house. It wasn’t like we didn’t pay, we both still had our jobs then, and we tried to stay in contact with them to fix the problem. Can anything be done at this point? Can we recoup any of our equity/down payment? We still have to file our ’09 taxes and don’t know how! I just found this website and will be taking some of the info here to our tax preparers. Thank you for reading and hope to hear from you soon.
Louie, good luck trying to get Citibank to change it.
I would suggest that you plan to include Form 982 with your tax return and report the 1099-C income there. You won’t pay tax and it puts the IRS on notice that you are reporting properly, but you won’t have to pay tax. The Form 982 has a place for you to check that indicates there is no tax due because of the BK.
Brenda, GOOD GRIEF!! what a story.
There are two general points I see:
(1) I’m not sure this was a legal foreclosure. This is not my expertise and I’m not a lawyer. But from what you’re telling me, it doesn’t seem right that B of A foreclosed on you without verifying Countrywide’s information. Definitely see a lawyer about that. B of A has had a lot of problems with foreclosure, including foreclosing on a guy’s house who didn’t have a mortgage on it! (And the court let them do it – kicked the guy out.)
(2) For the tax part, that I can discuss. If this is your principal residence, there is no loss that you can take on your return. You calculate the gain or loss by taking the FMV (as shown on the Form 1099-A) less your basis (this is most likely the amount you paid for the property plus any major improvements and plus any depreciation if this was a rental property). This is probably going to show a loss, but unfortunately, you can not take a tax deduction for a principal residence.
I had a car loan from 2003 that was repossesed and a 1099-C was filed to the IRS in 2003. There was a judgment in 2004 that they just now are taking my wages (at 25%!) I was never served and was under the impression I didnt owe this anymore. Unfortunately, I was young and didnt keep good records of anything from any o f this. But I do have the documents from IRS that the 1099-C was filed from the credit union that I had the loan with. Now both the original credit union that I had my loan with and the credit agency my account was sold to say I still owe even though the cancellation of debt was sent to the IRS. They say I have to pay and then notify the IRS when completely paid. I am really confused and dont think that I should have to pay the loan plus interest. What should my next step be? Thank you in advance for any advice!!
I had a bankruptcy in 2004 and kept my house but this year due to financial issues worked out a deal with my mortgage company and they will do a deed and Liu. I already signed the papers and it all done. I am just waiting for my 1099 but wonder if the old bankruptcy will help me not pay taxes on the 1099. At the time i listed I was keeping the house but never signed a reaffirm which is why the mortgage company let mr do the deed in liu. Will I still have the 1099 to declare on taxes or does it get wiped out because of the old bankruptcy? Thanks and I live in Michigan if that matters.
Hello:
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
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?
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?
oh BTW it was an investment property that went bad and raw land
Hi Diane,
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!
Regards,
Daniel
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
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?
We owned a house in AZ, which was our primary residence for 3 years. My husband recieved a job transfer in 2006 to WA. We tried to sell the house in AZ, without success, so we rented the house out for 4 years. We never could make enough rent to cover expenses so we ended up doing a short sale on the home in AZ. My question is will we be protected under the mortgage forgiveness debt relief act because the home began as our primary home? Also, I have not recieved a 1099-c yet from the bank, if I call the IRS to see if they have anything on file, does that raise a red flag for an audit?
Diane
I just received a 1099A from my previous 1st mtg holder Balance was 129K, Fair Market value 55K. We filed BK 13 which both 1st & 2nd mtg was filed and NOT reaffirmed BK 13 has not been discharged yet (we still owe 2 mths). We haven’t received anything from 2nd mtg holder (will I be)? We lost the home in foreclosure. Will we have to show the difference as income on our taxes? I am sick because this is so much more than triple than we make a year(yes the difference is) Please help.
Hi Diane. 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.
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?
Hi
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!!
Thanks
Hi Diane,
We live in California and have a first and second on our home. My wife was laid off and we got behind in our mortgage payments. We have been trying to work out a Modification on our first and then we would deal with our 2nd loan. We just received a 1099-C from our 2nd lien holder? What do we do with this and do we have to pay taxes on this amount? This is our principle residence and we are still in the home trying to work out a modification with our 1st lienholder.
Susie said:
“I had a bankruptcy in 2004 and kept my house but this year due to financial issues worked out a deal with my mortgage company and they will do a deed and Liu. I already signed the papers and it all done. I am just waiting for my 1099 but wonder if the old bankruptcy will help me not pay taxes on the 1099. At the time i listed I was keeping the house but never signed a reaffirm which is why the mortgage company let mr do the deed in liu. Will I still have the 1099 to declare on taxes or does it get wiped out because of the old bankruptcy? Thanks and I live in Michigan if that matters.”
Please check with your bankruptcy attorney on this. I believe that the 2004 bankruptcy is too old to help you with the 2010 debt. But if what you’re trying to do is keep from paying tax on the debt cancellation, it sounds like you’ll qualify for the debt exclusion because it was your primary residence.
If your concern is that