Debt relief based on 1099-A

[appelman]

Someone has probably already asked this: Is it good practice to impute debt relief from a 1099-A on a recourse loan, even when no 1099-C has been issued, or should one just report the property disposal and cope with the 1099-C if and when it appears?

[JG EA]

Someone has probably already asked this: Is it good practice to impute debt relief from a 1099-A on a recourse loan, even when no 1099-C has been issued, or should one just report the property disposal and cope with the 1099-C if and when it appears?

This is just an opinion based on what I have read and would like to see others opinions also: Since the lender must be able to pursue your client depending on the loan document and state law and that may require extra legal work by the lender I would wait. But if there is insolvency I would have my client list it all now to have in your records.

[Gary2]

I agree with JG. There's no cancellation until the lender decides it's canceled, but do the insolvency groundwork now.

However, lenders are notoriously late with the 1099-C. There may be value (either financial or psychological) in nagging the lender to issue it now, e.g. if it's easy to show insolvency now. Conversely, there may be value in letting sleeping dogs lie. Keep in mind that the lender could issue the 1099-C either with a current date, or as a late issued 1099-C with the same date as the 1099-A.