Taxpayer abandoned property and received a 1099A and this is recourse debt. One loan secured mortgage for both a personal residence and business (real) property. The bank has issued the 1099A for 2009 but has not yet sold the property and the debt has not been cancelled - taxpayer is still liable for the debt.
The 1099A:
box 2. $300,000 balance outstanding
box 4. $400,000 fair market value
Borrower is personally liable.
My understanding:
If the bank sells for $300,000 there will be no cancellation of debt.
If less than $300,000 possible cancellation of debt.
But this will not be known until something happens in 2010.
If this was reported as a sale w/ $300,000 sale price there is a loss.
Do I report this as a sale in 2009?
Or do I need to wait to see what the bank actually does with the property in 2010?
I don't mean to rely on my software, but when I enter the information on the debt cancellation worksheet the sale transaction and proper Sched D and Form 4797 come into play, but after I enter the amount the borrower is personally liable for the sale transactions "disappear".
I'm not sure if I need to report the abandonment in 2009 or 2010?
The 1099A:
box 2. $300,000 balance outstanding
box 4. $400,000 fair market value
Borrower is personally liable.
My understanding:
If the bank sells for $300,000 there will be no cancellation of debt.
If less than $300,000 possible cancellation of debt.
But this will not be known until something happens in 2010.
If this was reported as a sale w/ $300,000 sale price there is a loss.
Do I report this as a sale in 2009?
Or do I need to wait to see what the bank actually does with the property in 2010?
I don't mean to rely on my software, but when I enter the information on the debt cancellation worksheet the sale transaction and proper Sched D and Form 4797 come into play, but after I enter the amount the borrower is personally liable for the sale transactions "disappear".
I'm not sure if I need to report the abandonment in 2009 or 2010?
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