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    sallybenson's Avatar
    sallybenson Posts: 1, Reputation: 1
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    #1

    Oct 19, 2009, 11:10 AM
    CA tax impact on 1099-A
    In a short sale of principle residence with a non-recourse loan, what is the tax impact of a 1099-A in the state of California?
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #2

    Oct 19, 2009, 01:08 PM
    That depends on whether the short sale covers the cost of any underlying mortgage on the property.

    If it does NOT, the mortgage company may either:

    1) pursue collect from you the difference between what was owed and the proceeds from the sale through a collection agency and perhaps eventually via the courts.

    2) write off the difference. If they choose to write it off, they may then originate a Form 1099-C and show the writeoff as implied income to you.

    If you receive a Form 1099-C, you can file Form 982 under the Mortgage Forgiveness Debt Relief Act of 2007 to be relieved of any subsequent income tax on that Form 1099-C income, provided you meet the filing criteria.
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