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

[Jack the Tax Lady]

How would you handle this?

Brother bought house in his name because sister couldn't qualify. Sister made all payments until she stopped and house was foreclosed.

Brother did not live there, his personal house was also foreclosed.


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

*names, dates, and dollars have been changed to protect the ?

[solomon]

Appears the sister might be the beneficial owner. If so, she would do the reporting.

[Jack the Tax Lady]

that's what i was thinking, but he is now being audited

Appears the sister might be the beneficial owner. If so, she would do the reporting.

That's what I was thinking, but he is now being audited, and I am not sure how to explain this in a way that he can understand and the IRS agent can understand.

I am not representing him at audit, I am not an EA.

How would you address this with the auditor?

BTW, there are actually 4 houses involved. 2 personal, so the exclusion will apply, and 1 where there is no gain, then this one. So it is a little involved to explain to the auditor. I want to keep it as simple as possible.

We didn't address this on his tax return originally, because he moved more than once in the interim and never received the 1099s for these houses.

Thanks for any help.

[solomon]

Beneficial ownership would include such rights and obligations as: possession, obtain legal title upon full payment of the purchase price, construct improvements, pay property taxes, risk of loss, insure and maintain the property.

These would be the criteria that would be necessary to prove - which in short, are the burdens and benefits of ownership.

Do you know if the sister was claiming the mortgage interest and real estate taxes on her tax return? This would be an indication of the parties intent.

[Jack the Tax Lady]

Sister did not claim, she didn't think she could

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

[ChEAr$]

Follow the money

So the 1099 suggests income? See subject. Who got the money?

[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.

[Jack the Tax Lady]

1099A Abandonment form.

1099A Abandonment form.

So no money received, just property foreclosed.

[Jack the Tax Lady]

So then, what would you do?

Does not appear beneficial ownership applies.

So then, how would you report?

[solomon]

1099A Abandonment form.

So no money received, just property foreclosed.

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

[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?

[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]

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]

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]

This is only for house sister resided in.

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