I am slightly puzzlled. What to do when TP got credit in 2008 then began paying back 500.00 each year. TP abandoned house in 2012. Mortgager resold house in 2013. Does TP owe 500. for 2012 or the entire amount in 2012. Or does he pay 500 in 2012 and entire amount in 2013? TP did not get 1099A or 1099c in 2012. tp received no funds from mortgager on resell in 2013. I have no information concerning resell. What to do. Can someone enlighten me?
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Complete Form 5405
I would say you pay 500 in 2012 and complete Form 5405 for 2013. You treat the abandonment as a sale in the year for which you receive a 1099, presumably 2013. The 1099 should provide an FMV, though possibly not an accurate one. If the loan was recourse, the sale price is the lesser of FMV or loan balance. For a recourse loan, the sale price is usually the greater of FMV or loan balance. Note that you have to subtract unpaid credit from basis for the purposes of Form 5405.Last edited by appelman; 05-10-2013, 10:24 PM.Evan Appelman, EA
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