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

    Feb 19, 2010, 02:15 PM
    How do I challenge the fair market value on a 1099-A
    I lost a house to foreclosure in 2008. I received a 1099-A from the mortgage company that listed the Fair Market Value at $575,000 and the balance of the loan at $525,000. The property sold in November 2008 for $275,000. My basis in the property is $225,000 (I rounded all of these numbers down for this example). I am being told that I should challenge the FMV since there is clear evidence that the property is only worth $275,000. Otherwise, I will have a gain of almost $350,000, FMV - Basis = capital gain. So I have a few questions, first of all, is this correct? Second, if I challenge the 1099-A and am successful, then do I have to worry about incurring a cancellation of debt tax liability that would be just as bad? Or do you only have to worry about the cancellation of debt if you receive a 1099-C from the mortgage company, which I have not? And finally, how difficult is it to challenge a 1099-A and how do you do it? This was an investment property so none of the normal primary home exclusions would apply.

    Thank you
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    #2

    Feb 19, 2010, 02:52 PM

    I think if you were successful at challenging the 1099-A you would turn a capital gain of $350K into ordinary income (debt foregiveness) - which is taxed a higher rate. Out of the frying pan and into the fire!

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