1099-a

[Marinatax]

I have a client that has a 1099A where it is marked that she is not personally liable for repayment of the debt. The principal outstanding balance is less than the Fair market value. Their basis is equal to the FMV. I have entered the 1099a into my software and nothing carries over to the 1040 to show that the 1099a was reported. Do I need to complete another form such as a 982 or Sch. D? This property was not their principal home. I have contacted the IRS and about this matter. They told me to look at PUB 544. and report it on Sch. D but I do not know where because how it was not the main home.

[David1980]

Try table 1-1 of Pub 4681.

[Marinatax]

4681 tried

the thing is that she is not liable for repayment. her basis and FMV are the same so it kind of washes away everything the way the table works it says to subtract the basis from the outstanding balance if I do that it says she had a loss of 22,888 where do I put that loss? Her loan is a nonrecourse loan that makes the loss nondeductible according to the Pub 4681.

[David1980]

"Part 1. Complete Part 1 only if you were personally liable..."

So skip part 1.

"Part 2. Gain or loss from foreclosure or repossession."

Line 4

"enter the smaller of line 1 or line 2. If you did not complete Part 1(because you were not personally liable for the debt),..."

Basically you'll use the amount of outstanding debt immediately before the transfer of property. FMV doesn't matter when not personally liable.

So it sounds like the amount she owed was $22,888 less than her basis? That would normally be the case where the taxpayer took out a loan and then paid down $22,888 of it. $22,888 loss then (assuming taxpayer didn't receive any proceeds from the short sale). Depending on kind of property you could have a non-deductible loss, you could have a loss on Sch D, you could have a loss on 4797. It's just like any other loss of that kind.

[Marinatax]

thanks

Thanks for your help I just wanted to make sure that I was recording correctly on the 1040 to make sure the IRS sees that the 1099a was reported. it was confusing because of how it was not their main home.

[Davc]

You state that it was not their "main home". What was it? If it was a vacation home or a woodland plot they camped on in the summer or any other type of personal use property it would be a non-deductible loss.