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    #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
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    #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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      #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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