Foreclosure with no 1099-A

[peggysioux]

Bank foreclosed on primary residence of taxpayer in October of 2012. Taxpayer said house went on auction in December of 2012 but taxpayer received no 1099-A. Loan was a non-recourse loan so there should not be a 1099-C. My question is being taxpayer did not receive a 1099-A, should I still report the non-deductible loss of sale of residence on schedule D in 2012? I am wondering if the process carried over to 2013 and taxpayer might receive the 1099-A in 2013.

[ddoshan]

I don't think you would have to report anything. If this was their principal residence generally we do not have to report anything from a sale unless they have a taxable gain. Assuming they meet the tests. Where was this? It is more unusual than not for a home loan to be non recourse.

[Gary2]

Is there a statutory right of redemption? That's the only way I can see a 1099-A for 2013 being valid.

[Snaggletooth]

Timing determined by Bank

It is sometimes unfortunate, but there actually is NO debt forgiveness until the lender writes the account off their books.

In 2011 a client received a 1099-A for a foreclosure that occurred early in 2009.

So your client may yet receive a 1099 in 2013 or even 2014.

[Gary2]

It is sometimes unfortunate, but there actually is NO debt forgiveness until the lender writes the account off their books.

In 2011 a client received a 1099-A for a foreclosure that occurred early in 2009.

So your client may yet receive a 1099 in 2013 or even 2014.

As the base note here said non-recourse, the debt forgiveness is not relevant in this case.

And if it really was a 1099-A and not a 1099-C, then the lender in your case was in error. The 1099-A is all about the imputed sale, and is at most a warning about potential canceled debt. The only flexibility around the 1099-A is the option to roll it into the 1099-C if it's the same year. Otherwise, they're required to issue the 1099-A as soon as the foreclosure is final, even if they plan on taking several years attempting to collect the balance before canceling it.

In other words, it's potentially valid for a foreclosure in 2009 to result in a 1099-C in 2011, or 2012, or later. But it's not valid for a foreclosure in 2009 to result in a 1099-A in 2011 - unless there were legal proceedings interfering the with foreclosure.