Foreclosure and 1099A

[pambysue]

I received a 1099-A form from my mortgage company on my home that was foreclosed in April 2007. In box 2 (Balance of principal outstanding) it has $68,197. Box 4 (Fair market value of property) it states $70,000. The instructions on the form state "Box 4. Shows the fair market value of the property. If the amount in box 4 is less than the amount in box 2, and your debt is canceled, you may have cancellation of debt income."
My question is, I am getting ready to file my 2007 income taxes and wondered if I would have to pay taxes on any of this being that the FMV is more than the outstanding debt? Or did the foreclosure and taking of the house cancel my obligation? Its all very confusing!
By the way, I live in NY State, in case that makes a difference.
Thankyou for any help/advice!

[JPOP1]

Can any of the moderators answer pambysue's question. I have the same basic question only my numbers in box 2 are $170,527.16 and in box 4 (FMV) its $180,696.00. My home was included in my Bankruptcy that I filed in 2006 and was discharged early 2007. I'm pretty sure that I do not owe any Taxes based off what I have read on this site.I'm trying to figure out if I have to file this 1099-A when I do my taxes. My wife and I use Turbo Tax and are ready to file but we are not sure if we have to enter anything about form 1099-A. Can anyone help??

[HHM]

If the mortgage company reported FMV as higher than the balance owed, I do not think there is anything you have to do.

However, I am not a tax expert in this regard. Since they filed a 1099-A and not a 1099-C, I think the form is purely informational (i.e. the mortgage company is required to issue some manner of 1099 on any sale/transfer of real estate that was secured by a mortgage).

[Joe Farmer]

I'm waiting for this same answer on another site.

I think HHM is correct that the 1099-A is an informational only form the lender has to file that indicates their loss to the IRS, where a 1099-C would be possibly income to you (debt less FMV would be your income) unless you were insolvent, filed BK, and another confusing idea is whether your state allows deficiency judgments- if not, I don't think a 1099-C would affect you. There's more talk of these forms and what to do about tham all over the internet as forclosures skyrocket.

[Catia]

There are new laws, retroactive for the entirety of 2007 that state if part/all of the loan was 'forgiven' in FC or shortsale and you were 1099'd for the deficiency (instead of being sued and having a judgement)--the IRS will NOT make you claim this as income--there are criteria to meet.
I posted about this in the Foreclosure section--pls refer to that, or do search about
HR3648 Mortgage Forgiveness Debt Relief Act
I really hope some of you can use this--

[HHM]

There are new laws, retroactive for the entirety of 2007 that state if part/all of the loan was 'forgiven' in FC or shortsale and you were 1099'd for the deficiency (instead of being sued and having a judgement)--the IRS will NOT make you claim this as income--there are criteria to meet.
I posted about this in the Foreclosure section--pls refer to that, or do search about
HR3648 Mortgage Forgiveness Debt Relief Act
I really hope some of you can use this--

True, but in her case, there was no deficiency balances.

[concerned]

I do have a deficiency balance

I only received a 1099-A; am also in NY. Anyway, my box 2 was $20 k more than my box 4. My home was included in my ch. 7 bk in '06 and we later foreclosed on the home in early '07. Does this mean we do not owe a tax liability?

Thanks,

Concerned

[Becka]

I have sort of same problem

We filed bankruptcy in 2008. It was discharged in 2008 and our home that was in foreclosure was included in the bankruptcy. We received a 1099-A from the lender. Do I have to file this with my return or is this just for information purposes and does the IRS already have information regarding our bankruptcy and that the house was included. I am so confused and I just dont want to file wrong and then get his owing the IRS. Also what about the foreclosure act that was passed in 2007? Does that apply or do we have nothing to worry about since the house was included in our bk?