abandoment of secured property

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  • Ken
    Senior Member
    • Jul 2005
    • 180
    #1

    abandoment of secured property

    I KNOW I have delt with this before but I'm having a brain freeze right now.
    Client came in my office with a form 1099A . He had walked away from a home he owned and the bank took it over. The outstanding principal on the house is $113.487 but the fair market value is $135,000.
    How do I handle this?
    ken
    Tags: None
    • appelman
      Senior Member
      • Jan 2010
      • 1195
      #2
      Treatment depends on whether or not it is a recourse debt.

      For details, see pp 11-12 of Pub. 4681.
      Evan Appelman, EA

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        • Ken
          Senior Member
          • Jul 2005
          • 180
          #3
          Thanks for your reply appleman. I studied it a little and concluded it needs to treated just as a sale of his home. He actually had a loss, but of course he cant take a loss on his home on schedule D.
          Had it been a 1099 C instead of a 1099 A it would have been a little bit of a different story.
          ken

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