WhereshouldForm1099-Abeentered?
ForenteringdatafromForm1099-A,AcquisitionorAbandonmentofSecured Property,thereisnodedicatedscreen.Inordertodecidewhetherandwhereto enterandsubmitthedatareportedonForm1099-A,youmustfirstassessit.
Whensellingproperty,thetaxpayertypicallyneedstosubmitone ormoreofthefollowingforms:
● CapitalGainsandLossesScheduleD
● SalesofBusinessPropertyForm4797.
● Like-KindExchangesForm8824.
● SalesandOtherDispositionsofCapitalAssets,Form8949
1099-Aand1099-Cforms:
TheForm1099-A,AcquisitionorAbandonmentofSecuredProperty,which providesthedetailsyouneedtocalculateyourgainorloss,mustbesenttoyou bythelenderwhoobtainsaninterestinyourpropertythroughaforeclosureor repossession.
However,theinformationregardingtheforeclosureorrepossessionmaybe includedonForm1099-CratherthanForm1099-Aifthelenderalsocancelsa portionofyourdebt
Supposethecancelleddebtisfor$600ormoreandthelenderisafinancial institution,creditunion,federalgovernmentagency,orotherappropriatebody. Inthatcase,thelendermustprovideyouwithacopyofForm1099-Candfile it.
TheseformsoughttobedeliveredtoyoubyJanuary20Yforforeclosuresor repossessionsthattakeplacein20XX
Whetheryouwerepersonallyliablefortheobligation(recoursedebt)orwere not(non-recoursedebt),determinesthetaxrepercussionsofgivingupproperty usedtosettleadebt.
Revolvingdebt:
Thetaxpayerwillgetordinaryincomeequivalenttothecancelleddebtifthe propertyusedtosecureapersonalliabilitydebt(recoursedebt)isabandoned andthedebtiscancelled.
Itisdistinctfromanymoneyreceivedfromthesaleofthepropertyandcanbe calculatedusingForm982,ReductionofTaxAttributesDuetoDischargeof Indebtedness(andSection1082BasisAdjustment),whichcomeswith instructions.
Unsecureddebt:
Itisconsideredasaleorexchangewhenataxpayerabandonspropertyusedto secureadebtforwhichtheyarenotpersonallyliable(non-recoursedebt).
Thenon-recoursedebt'samountisrepresentedbytheamountrealised.Again hasbeenrealisediftheamountrealisedexceedsthetaxpayer'sadjustedbasis.A losshasoccurredifthetaxpayer'sadjustedbasisismorethantheamount realised
Lossresultingfromtheabandonmentofcommercialorinvestmentpropertyis deductible.Thenatureofthepropertydeterminesthenatureoftheloss.There canbeacaponthedeductiblecapitallossamount.Anylossresultingfromthe abandonmentofaresidenceorotherassetretainedforpersonaluseisnot deductiblebythetaxpayer.