[chris111972]

I received form 1099-A for a foreclosure, I don't understand if I owe taxes or is this just for information. Box 2: balance of principal is 264,803.30 and box 4: Fair market value is 311,105.00. Can some please tell me what this means.

[MukatA]

Box 2. Enter the balance of the debt outstanding at the time the interest in the property was acquired or on the date you first knew or had reason to know that the property was abandoned. Include only unpaid principal on the original debt. Do not include accrued interest or foreclosure costs.

Box 4. For a foreclosure, execution, or similar sale, enter the FMV of the property. Generally, the gross foreclosure bid price is considered to be the FMV.

1. You may have to report sale on Schedule D (Form 1040).

2. Any debt canceled is your income.

3. If you lived in the house for two years and owned it for two years in last 5-years, you may be eligible to exclude gain of up to $250,000. Read: Your U.S. Tax Return: Profit From the Sale of Your Home

4. The Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt of recourse loan on their principal residence. Read about foreclosure or repossession Your U.S. Tax Return: Foreclosure or Repossession of Main Home

[Gimpdiggity]

I also am wondering about this.

I got a 1099-a as well.

In Box 2 it lists: Balance of Outstanding Principal $110,721.87
In Box 4 it lists: Fair Market Value $115,296.92
In Box 5 it has: Borrower Personally Liable, "Yes"

Everything that I can find about how to use form 982 revolves around getting a 1099-c instead of the 1099-a.

In fact, I'm not even really sure what this 1099-a is telling me. It's not telling me there's been any debt canceled... it's not telling me what the home sold for... I'm beginning to think that it's only a device to help me figure out gains or losses.

But without a 1099-c, can an individual still use the Tax Relief Act to avoid paying taxes on any kind of gain? Both of the amounts listed on the 1099-a that I received are LESS than what I figure the adjusted basis of the home is. I paid $113,000 for the home, and did about $5k worth of improvements to the home. So I figure the basis would be $118,000... so the way I look at it, it would be a loss... which is not deductible.

But I'm confused as if I need to report this anywhere at all on my return, seeing as it's not a gain, and it's not showing any cancelled debt, so it's not income.

[AtlantaTaxExpert]

I tend to agree with your contention that, if there is no cancelled debt, you have no requirement to file Form 982.

However, the year is still young, and you may STILL get that Form 1099-C.

If you do, at that time you should seek professional tax help to file the Form 982.

[redbuttons]

We received the 1099-A. What we don't understand is that we filed chapter 7 bankruptcy. Why would we have to pay any taxes on something we couldn't pay nor sell? We had no income from this property.

[AtlantaTaxExpert]

The cancelled debt that you did NOT have to pay is considered taxable income by the IRS. However, if the FMV (Box #4) of the property EXCEEDS the debt that was forgiven on (Box #2), then there is no income and thus NO Form 1099-C should be issued.

If there is no Form 1099-C, you have nothing to worry about.

[nadia9696]

By 4/28/09 I received the 1099-A with a principal outstanding balance for $66,584.18 (section 2) and $0.01 (section 4), and in section 5 was mark on Yes. I called the bank sometime this month and I got an other "Corrected" 1099-A dated on 4/28/09 Section 2 with $00.00 and Section 4 with $00.00 and Section 5 mark with "No"... my question is... do I have a balance that the bank toll me that I owe and they considered loss... or the bank is telling me that they are not claiming any loss and I need to pay them?

[nadia9696]

By 4/28/09 I received the 1099-A with a principal outstanding balance for $66,584.18 (section 2) and $0.01 (section 4), and in section 5 was mark on Yes. I called the bank sometime this month and I got an other "Corrected" 1099-A dated on 4/28/09 Section 2 with $00.00 and Section 4 with $00.00 and Section 5 mark with "No"... my question is... do I have a balance that the bank toll me that I owe and they considered loss... or the bank is telling me that they are not claiming any loss and I need to pay them?

[AtlantaTaxExpert]

No, what the bank is telling you is that, for tax filing purposes, the property has NO fair Market Value and that there is no forgiven debt.

Keep BOTH Form 1099-A for your records, but unless you receive a Form 1099-C, you need do NOTHING on your tax return in regards to these Forms 1099-A.