Discussion:1099-A's and Bankruptcy
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Discussion Forum Index --> Basic Tax Questions --> 1099-A's and Bankruptcy
Discussion Forum Index --> Tax Questions --> 1099-A's and Bankruptcy
| 20 February 2008 | |
| I have a client who purchased a home in California in 2005. One year later in 2006 they moved out of the house. In November of 2007 they went into chapter 7 bankruptcy. They received two 2007 1099-A's related to the California Property. The first 1099-A has a box 2 (Principal Outstanding) balance of $85,000 and box 4 (FMV) of $395,000. The second 1099-A has a box 2 balance of $344,000 and box 4 balance of $277,000.
I'm unsure of how to report these amounts. Can I report it all on Form 982, check box 1e for discharge of principal residence and report the total amount of the debt on line 2 and 10b? Should I be concerned that the 1099-A's report differing values for the FMV of the property? Can I still call it principal residence indebtedness when they no longer lived in the house at the date of abandonment? Do I need to report it as a sale? Thank you for any help you can provide. | |
| 20 February 2008 | |
| Check the 1099-A's to see if the debtor is personally liable on the mortgages. Assuming that the debtor is not personally liable on either mortgage, the sales price of the property is the balances on the mortgages. | |
| 21 February 2008 | |
| The taxpayer is personally liable on one of the mortgages only. How does that change things? | |
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