Tax Form 1099-A What does it Mean?

[isla1]

My BK was discharged on 09/29/10. Hooray! I surrendered my house in the BK. The house is still sitting empty and unsold. I recieved a 1099-A tax form in the mail today and I don't know what it means! It has in box #2 balance principle $ 171, 787.87. and in Box #4 It has Fair Market Value of Property $184,414.30. Box #5 says Was Borrower personally liable for repayment of the debt? And It's marked Yes! Does anyone know what this means? That's about $13,000.00 in difference between fair market value and what I owed At the time of my BK. Please Anyone! What do they want now???

[Meatstick]

http://www.bkforum.com/showthread.php?51360-Tax-question-1099-A&highlight=1099-A

Look at post #3 in the above link.

I am also pasting what TaxAct has for form 1099-A. I did not see any references to these forms and BK. Therefore I am not sure what coarse of action to take as we also received a 1099-A.

Form 1099-A 'Acquisition or Abandonment of Secured Property'

If you received a Form 1099-A, the first thing you must do is determine whether there has actually been a cancellation of debt. The lender should have sent you Form 1099-C, 'Cancellation of Debt' if any debt was canceled. If you did not receive Form 1099-C you would want to contact your lender to determine if any debt has been canceled.

Foreclosure/Repossession
The foreclosure or repossession of property is treated as a disposition of property from which you may realize gain or loss. Use the Worksheet for Foreclosures and Repossessions on page 11 of IRS Publication 4681, 'Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals)', to compute the amount of gain or loss to claim:

If this was a foreclosure of your main home, use the Sale of Your Home topic in the Investment Income section.

To enter the gain or loss for business property, use the Sale of Business Property Worksheet in the appropriate business section (Schedule C, E, or F).

To enter the gain or loss for investment related property (on Schedule D), use the Capital Gain or Loss (Form 1099-B) interview in the Investment Income section.

To access Form 1099-B in TaxACT:
1.Log into your TaxACT Online return or start your TaxACT Desktop program
2.Click on the 'Federal Q&A' tab
3.Click 'Investment Income' to expand the section and then Click 'Gain or loss on sale of investments'
4.Click 'Capital gain or loss (Form 1099-B)'
5.Click 'Add' to create a new copy of the form or Click 'Review' to review a form already created
6.The program will proceed with the interview questions for you to enter or review the appropriate information
On the screen titled 'Investment Sales - Details', please have a copy of your Form 1099-A and a completed copy of the Worksheet for Foreclosures and Repossessions (see above).

Please enter an appropriate description.


The 'Date sold' will be the date shown in Box 1 (1099-A).
The 'Sales proceeds' will be the amount from line 6 of the Worksheet for Foreclosures and Repossessions.
The 'Date acquired' will be the date you purchased the property.
The 'Cost or other basis' will be the amount from line 7 of the Worksheet for Foreclosures and Repossessions.

If this is personal property: Continue to the screen 'Investment Sales - Other Items' and check the box to indicate the property is personal-use property.

Any gain computed will be taxable. A loss will not be deductible on your return, since it is personal-use property.


http://www.taxact.com/tsupport/FAQDi...archValue=form 1099-a

Maybe someone with more knowledge on this subject will post the correct coarse of action. Otherwise a CPA or experienced tax preparer should be able to answer.

[isla1]

Thanks Meatstick! It is so terrible to recieve a tax form concerning my former BK on a Saturday, when I can't call my former lender or my attorney until Monday. Love this forum! If anyone as any thoughts as to why I recieved a 1099-A tax form, when I surrender my home in my Bk, and the BK was dismissed last August, let me know your thoughts! Thanks, Isla

[Meatstick]

isla1 it appears you may not have to do anything unless they also send you a 1099-C.

You don’t need to worry about getting a 1099-A.

If the bank took over your house in a foreclosure, either before or after filing a bankruptcy, you will receive a copy of a 1099-A. Form 1099-A is a form the mortgage company is required to file to show that they acquired your property. It’s what the IRS calls an informational return–it just gives information to the IRS.

You should not receive a 1099-C, which is a cancellation of debt return. You should not, but you might anyway. You should not, because there are NO tax consequences for debts discharged in bankruptcy. So you are NOT taxed on what they didn’t get at the foreclosure sale. The bankruptcy protects you from that tax. Here’s the link to the IRS website that says that. http://www.irs.gov/newsroom/article/...174034,00.html.

If you get a 1099-C anyway , the IRS may later write to you and say, hey, you owe us another $XX,000.00 because of the debt cancellation. If you get that letter from the IRS, you need to write them back and say this debt was discharged in bankruptcy. Send them a copy of your bankruptcy papers. I’ve always seen that work. If you want, I can write that letter for you (assuming you are my client.)

(One thing I should add; I’m assuming your property is here in Virginia or another state that has similar mortgage laws. If your property is in a state like California, where the mortgage company cannot chase you after a foreclosure, in certain circumstances, it would be really important to file your bankruptcy before the foreclosure sale, not after.)

So, here’s the summary.

Get a 1099-A. Expect to get one; no need to do anything.

Get a 1099-C. Should not get one, if you do, expect to hear from the IRS.

IRS letter saying, you owe us all this money. Write back and say, no I don’t, because of the bankruptcy.

http://robertweed.com/blog/general-bankruptcy-law/bankruptcy-foreclosure-1099-a-and-1099-c/

[isla1]

Thank You! I feel so much better. By the way, I am in Missouri. Not sure about their laws. I have put this behind me (The BK) and have been sleeping quite well! Hope to keep it that way! Thanks for your offer to help by writing a letter to thr I.R.S. Hopefully it won't be needed! Isla

[Meatstick]

That letter offer was posted as information on the website link not by me. I suck at writing letters !

[isla1]

Yeah, I saw that! I read the link after I had already replied to you. But I saved it, in case I need to refer to it! Have a great day. At least you are good at helping others!

[LadyInTheRed]

Get a 1099-C. Should not get one, if you do, expect to hear from the IRS.

IRS letter saying, you owe us all this money. Write back and say, no I don’t, because of the bankruptcy.

http://robertweed.com/blog/general-b...-a-and-1099-c/

Don't wait to hear from the IRS if you get a 1099-C. Attach form 982 to your income tax return and check box 1a to show the debt was discharged in BK and on line 2, fill in the total amount that the 1099-C shows was canceled. See tax topic 431 or page 4 of IRS Publication 4681

[isla1]

Thank You! And I hope not to get a 1099-C. That is a bad thing.But I am going to save your post just in case!

[tcreegan]

Hi isla,

By the way, I am in Missouri. Not sure about their laws.

Don't let the good state of Missouri worry you, these are all federal laws over and above the state level

Tom in Colo

[isla1]

Good to know that MO can't mess with me! Thank You!

[feelingnutsy]

Thanks to all of you---since I just got the same thing.