1099-S Form on a short sale

[laurannm]

Hi all,

We completed a short sale on our house in 2013. Both mortgages on the house were discharged in a Ch 7 back in 2008 (and not reaffirmed). Today I received a 1099-S from the law office who handled the closing, and the 1099-S is showing gross proceeds of $249,000, which was the selling price of the house. Do I need to do anything with this, given that it was discharged?

Thanks!

[justbroke]

If this home was included and discharged in bankruptcy, you would still need to file the 1099-S and probably complete IRS FOrm 982 to show that the debt was discharged in a bankruptcy. Otherwise, I believe that the gross proceeds would be a taxable event. This is why you should have a tax professional prepare your taxes this year.

[laurannm]

Thanks....I ran through the scenario in Turbo tax and it looks like that since the proceeds fall under the $250k\$500k (single\married filing joint) IRS limits, I won't owe any taxes on it but I still need to report the transaction on Schedule D, Capital gains\loss

[PANSYFACE]

No - doesn't go on Schedule D. Do the 982 form instead. Normally. it wouldn't be reported at all but since this was included in bankruptcy, fill out Form 982 accordingly. I was a CPA in my former life and Turbotax has a way of misleading people.

[Pjmax]

I've heard that Turbotax doesn't support Form 982, so maybe not a good idea to rely on Turbo. I wish I could remember where I read that, it might have been a thread here. I'll see if I can find it.

[justbroke]

I would only use TurboTax if I entirely understood the interaction of a 1099-A/C/S behaved and what would need to be reported. As such, my personal opinion and next step, would be to use a professional tax service. You can still file electronically through most professional tax services. I just would not personally want to have unnecessary delays or any "assessments" pop up later -- even if those assessments were not applicable because the underlying debt was discharged in a bankruptcy.

Of course it, how you do or have your taxes completed, is up to you.

[tobee43]

if you rec'd a 1099S, A C G which ever it may be good for you to use an accountant this year. S usually is a capital loss, which i find it odd you didn't get an A as opposed to an S. however, either way if you filed bk and listed the house as suggested just attach the 982 and you should be fine.

[LadyInTheRed]

A 1099-S is not the same as a 1099-C. It does not require a 982. The OP is correct to be looking at whether there is a capital gain on the sale. I am not sure about the affect of a BK discharge on the basis. If Turbo Tax doesn't specifically address that, I would conult with a tax professional.

[Elie]

If anyone needs to fill out a IRS form 1099s, I found a blank form here: [removed by moderator]

[justbroke]

Elie please re-read the Forum rules and refrain from reviving old threads.