1099-A for second home

[bgiez]

Just looking for confirmation that I have handled this correctly as this is the first actual 1099-A I've seen. TP received 1099-A for abandonment of 2nd home, which was purchased in 2006 and has a basis of $150,252.
Box 1: Feb 9, 2010 date of abandonment
Box 2: $134,385 balance of principal outstanding
Box 4: 102,900 FMV of property
Box 5: Yes borrower personally liable

No 1099-C was received.

Entered on Schedule D: property description, type = personal, sale date 2/9/2010, purchase date 1/31/2006, sales price $102,900, basis $150,252, gain/loss = $0 ($47,352 personal loss not allowed)

My software calculated cancellation of debt income of $31,485 which I overrode to $0 since no 1099-C. Looks like we'll deal with COD in a future year.

Thanks for any input.
Barbara, E.A.

[solomon]

Agree...................

One caveat. If the taxpayer's state permits deficiency judgments, then the lender, if so inclined, may not issue a 1099-C but rather seek to be compensated.

[bgiez]

Well, last week

the client got a 1099-C with a cancellation of debt date of February 9, 2010. Can anyone explain why the lender would issue a 1099-A dated February 9, 2010, get it to the client in January of 2011, but not send the C until 2 months later, or just issue a C? And why couldn't they tell her that they were going to issue the C when she called to ask them?

My client is not in bankruptcy nor is she insolvent as she owns her home, which has some equity, has investments and retirement accounts that she is living off of.

I guess it's a 1040-X and an installment agreement unless anyone has any ideas. Just what I need to do during the final countdown.

[origun]

Recourse or non-recourse

Is the loan a recourse or non-recourse? If I understand correctly, if a non-recourse loan, no COD.

[bgiez]

Oh, it's definitely recourse. And not primary residence or investment or business property. Not bankrupt, not insolvent. Client just bought a home for her recently divorced son to live in so he could be close to his kids, then son left the country and his mother holding the bag (mortgage). And she sees it as all the bank's fault, not hers or her son's. And here I thought is was only the most recent generations who did not take responsibility for their actions.

[Gary2]

the client got a 1099-C with a cancellation of debt date of February 9, 2010. Can anyone explain why the lender would issue a 1099-A dated February 9, 2010, get it to the client in January of 2011, but not send the C until 2 months later, or just issue a C? And why couldn't they tell her that they were going to issue the C when she called to ask them?

The lender is already losing money on the deal, you expect them to spend more to hire an exemplary bookkeeper?

Seriously, this just seems to be the common practice.

[joanmcq]

I have clients in somewhat the same situation and the 1099-C was sent in late March. I can get rid of some of the COD with insolvency, but I'm not sure of the rest.

Kicker is, they pulled money out of the second house (they were going to rent it out but never did after buying a new house) and paid off their vehicles and credit cards. And this is CA, so the COD is way way more than $32k.