Discussion:1099-S Real Estate Proceeds
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Discussion Forum Index --> Basic Tax Questions --> 1099-S Real Estate Proceeds
Discussion Forum Index --> Tax Questions --> 1099-S Real Estate Proceeds
| 6 March 2009 | |
| CLient, filing MFJ, sold personal residence for $250,000 and got a 1099 at year end. Obviously it is exempt from tax, but is there a form to file with the return in reference to this exemption? ... for example, something akin to Form 982 (Reduction of Tax Attributes) that is filed with the tax return in reference a discharge of indebtedness?
thanks | |
Rgtaxservice (talk|edits) said: | 6 March 2009 |
| Show the gain on sch D. Then show the Sec 121 exclusion for same. | |
| 6 March 2009 | |
| we used to have Form 2119
but then we used to have Income Averaging too. I had a client asking for Income Averaging today. she was not a farmer nor a farmer's daughter so I couldn't help her. | |
| 6 March 2009 | |
| I just did one of these a few days ago. Although I believe you are not technically required to even report the income (per Sch D instructions), you want to avoid those lovely CP-2000 notices. I showed the sale on Sch D, then on the next line a Sec 121 exclusion subtracting the "gain". If you use Lacerte it has a check box under Sale of Home on sch D input. | |
Rgtaxservice (talk|edits) said: | 6 March 2009 |
| Form 2119 was a long time ago. I always get new homeowners that think they have to save to every receipt for the house they just bought. I go into into the explanation of how it was changed a few years back and so on. It was sometime this season that I realized that 121 has been around for almost 10 years. Then I felt old. | |
| 6 March 2009 | |
| I show the gain on Sched D, then show the 121 Exclusion. This way the IRS forms matching program will find the 1099-S amount in a "Sale Proceeds" field on the tax return. I do this for any form a client receives, even if it is non-taxable income, such as 1099-R that does not show the taxable amount. I never just skip over it. It is always better to show the gross income in proper place on tax return, with an offset for non-taxable... even if it nets to zero. Show it anyway, so the IRS can see the trail. Re personal residence - I still tell my clients to save their receipts for home improvements. You never know when the law will change, causing gain on sale of personal residence to be taxable again, thus the need to have proper cost basis records from the date of purchase. Also, some people move and turn their personal residences into rentals instead of selling. Again, having these receipts is necessary to set up depreciation on Sched E. I just tell them to keep all these receipts in one permanent file, just in case they need them years down the road. | |
| March 6, 2009 | |
| Here's a previous discussion on this topic. | |
| 6 March 2009 | |
| The previous discussion Belle mentioned made me think of another issue with 1099-S. Some real estate attorneys/title companies do not give the seller a copy of the 1099-S, but they do send the IRS a copy. All the more reason to show it on the return and avoid complications with IRS later. | |
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