1099 A

[S T]

I have a really big concern here

T/p received a 1099A for abandonment on personal residence converted to rental property

Basis is $ 230,000
1099A shows 573,000 princ outstanding and $ 644K for FMV - personally liable

If I dispose of on 4797 I have a huge gain

Here is the question - was discharged through BK

Does the BK have any consequence on selling the Rental Property?

No cancellation of debt 1099C as of 12/31/11

I am totally perplexed on this one

Thanks

Sandy

[BP.]

T/p received a 1099A . . . discharged through BK

Does the BK have any consequence

Pub 4681 discusses bankruptcy exclusion; how to report; use of Form 982. Maybe that will help you sort it out.

http://www.irs.gov/pub/irs-pdf/p4681.pdf

[Gretel]

I don't believe that bankruptcy has any bearing on the sale you have to report on 4797. Somehow the figures don't look right to me but you have the details. Maybe basis is low because of depreciation. Otherwise the FMV seems very, very high.

[S T]

Well the number's on the 1099A don't look right to me either. I think the 1099A is reporting values at FMV etc at an amount back in 2008 not current for March 2011, particularly in California

So what does one do to "arbitrate" those amounts?

This is huge for this taxpayer if I have to use the 573K - it will produce a huge tax burden on the dispostion of the rental - and obviously they are in trouble as they filed BK and it is listed on the BK and discharged.

Can someone give some guidance on how to proceed - I am looking at extension for sure, but that is problematic, as the T/p already has an installment agreement for a prior year

Thanks,

Sandy

[Lion]

Did the bankruptcy trustee dispose of the rental? Or did they return it to tax payer? Did the taxpayer actually own the rental at the time it was abandoned, or did the bankruptcy estate? Maybe the abandonment was handled by the trustee.

[S T]

Property on bankruptcy papers - just received those, and it was turned over to the lender in January 2011 , but the lender issued the 1099A - Actual BK was finalized on 3/14/11- I do not have a 1099C - I have no idea on how to report this on the tax return for the 1099A when lenders can not make up their mind but issue IRS forms

T/p - gave up the property to Lender (Rental property) Jan 2011 - BK discharged on 3/14/11, lender reports as abandoned on 10/2011

I know I have to report the Rental Property Sale on 4797, but it just seems not to compute that I am going to have this huge gain - basis vs 1099A amount used, when the T/p had to forfeit the property - Calif is usually deed in lieu of foreclosure nonrecourse or recourse loan. and the amount stated on 1099A seems to be really a high market value.

What questions do I need to ask the BK attorney that will assist T/p in any type of tax relief for gain on this BK disposal of the property??
Thanks,

Sandy

[Gretel]

Just an idea. Can your taxpayer find out for how much the rental actually sold, if it is sold? If not I would try to get an appraisal.

Contacting the lawyer is also a good idea. He had to use some value for the rental in the bankruptcy.

[ddoshan]

Without researching things ... He has a basis of 230K. He owes 573K and deserves to show a gain on this deal. There would appear to be no cancellation of debt here.

[peggysioux]

1099a

If property was included in bankruptcy estate in first part of 2011 and foreclosure took place after property was an asset of the bankruptcy, then I would think you would not do a 4797 for the taxpayer as he no longer owned the asset.

[S T]

I know there will be gain on the Rental Property - just that the BK is really confusing me, and the $$ amounts listed. Property was turned over to the Trustee in Feb 2011, then the lender issues this 1099A form effective Oct 11

From what I can tell - the property has not sold - the lender is still holding. Hoping to have more info from Attorney or BK Trustee tomorrow.



Sandy