I had a rental house that we lost through foreclousre this year, I received a 1099-A "Acuisition or Abandonment of secured property" stating balance of principal $164,664.30 with a fair market value of $0.00.

We are filing Bankrupt in May '08 our BK Attorney states we won't have to pay the taxes because of BK protection. Is this true? If so what papers do we need to file??

Thanks in advance,
John V

John V:

It probably is true. A recent tax law passed exempts you from declaring income that result from certain foreclosures.

However, the amount of money involved DEMANDS that you go see a CPA about this ASAP.

I received a 1099-A for a foreclosure that sold on 11-2007 and now I received a collections bill for $374k and the 1099-A amounts were for box2 $352 and box4 $324.. am I responsible for the collection even though they 1099-A me?

You can get an exemption from paying taxes on the Form 1099-A amount by filing Form 892 with your tax return.

This return will necessitate that you file by snail mail, but considering the taxes you will NOT have to pay, that is a small price to pay.

If you need professional help, contact me at [email protected].