1099A Brother bought house, Sister lived in, Now foreclosed

[Jack the Tax Lady]

that may be true

The brother probably would be wise to obtain representation.

That may be true, and it is something I have considered.

Let's say you were representing him, how would you handle it?

[solomon]

The brother probably would be wise to obtain representation.

[Jack the Tax Lady]

Then you are saying that there was no equity taken on the refinances?

No, I was answering the question about whether there was income received because there was a 1099. Of course they took equity out of the refinance, that's how they bought the car (from other answer)

He received a 1099A for abandonment, not another type of 1099 for income. Although, I realize he may have a realized gain that may be taxable, it is not strictly speaking income.

So, it does sound like there were some high refi costs taken out of the refi, but they still took about $40,000 or so to purchase a car, etc.

I really appreciate your suggestions, these are a real pain.

[taxmom34]

i would think he should have reported sisters house as rental property , her payments to the bank would be his rental income. it would certainlly have simplified the situation.

[JohnH]

And we have people wondering why there's a housing bubble & credit crisis...

[Jack the Tax Lady]

bought a car

What happened to the 100K brother took on the refinances.
Cost - 200K
Debt - 300K

He says that they only received $40,000 in the refinance and they bought a car with it. That's the main thing, I'm quite sure there were other things too, but nothing to improve the house. He said there were a lot of fees paid for the refi as well.

He doesn't have any idea why the principal balance is $300,000 when they refied for only $250,000

[solomon]

This is only for house sister resided in.

What happened to the 100K brother took on the refinances.
Cost - 200K
Debt - 300K

[Jack the Tax Lady]

only sisters house

Is this only for the house in which the sister resided or for all four houses.

This is only for house sister resided in.

[solomon]

Here are the details:

purchased in 2004 $200,000

refied in 2006 $250,000

abandoned 06-01-2009

Received 1099A for 2009

balance of principal outstanding $300,000

FMV $250,000

neither box checked

Is there anything else that is needed?

Is this only for the house in which the sister resided or for all four houses.

[Jack the Tax Lady]

more info

Without knowing the actual numbers and additional facts, it is hard to say.

If you are referencing the 1099-A, it would go on the brother's return. However, it seems more sticky for other items. For example, was he deducting the mortgage interest that his sister was paying? How about the real estate taxes on that property? Did the sister's payments constitute rental income to the brother?

By the way, canceled debt exclusion is for a principal residence of the brother - which where his sister resided was not.

Here are the details:

purchased in 2004 $200,000

refied in 2006 $250,000

abandoned 06-01-2009

Received 1099A for 2009

balance of principal outstanding $300,000

FMV $250,000

neither box checked

Is there anything else that is needed?

[solomon]

So then, how would you report?

Without knowing the actual numbers and additional facts, it is hard to say.

If you are referencing the 1099-A, it would go on the brother's return. However, it seems more sticky for other items. For example, was he deducting the mortgage interest that his sister was paying? How about the real estate taxes on that property? Did the sister's payments constitute rental income to the brother?

By the way, canceled debt exclusion is for one principal residence of the brother - which where his sister resided was not.

Just noticed. You are saying the 1099-A includes all four houses?

[solomon]

1099A Abandonment form.

So no money received, just property foreclosed.

Then you are saying that there was no equity taken on the refinances?

[Jack the Tax Lady]

So then, what would you do?

Does not appear beneficial ownership applies.

So then, how would you report?

[Jack the Tax Lady]

1099A Abandonment form.

1099A Abandonment form.

So no money received, just property foreclosed.

[solomon]

Sister did not claim on her tax return, because the forms were in brother's name. She did not think she could.

She is not our client, and she lived in another state

Does not appear beneficial ownership applies.