Taxpayer had house in CA and moved out of state in 2009. Taxpayer rented it while waiting for the market to go back up. Finally he got tired of that and let it be foreclosed on and filed Chapter 13 bankruptcy. Original Purchase price was $175,000 Had refinanced and took some equity out. (NOT acquisition debt).
Taxpayer received a 1099-A YES, personally liable for the repayment of the debt.
Box 2 $218,000 Balance of principal
Box 4 $233,088 FMV of property
So yes, FMV is more than Principal balance so I don't believe there will be a 1099-C issued at all.
The difference of the Purchase price and the balance of the principal is the equity debt he had taken out.
He also rented it out since 2009 and depreciation taken is about $13,000
Normally this would have a taxable gain. However, I am questioning that in this situation, he had filed bankruptcy and put the house in it.
So he did not receive a dime on this. So how do I report the 1099-A since it is a deemed sale?
Thanks!
Taxpayer received a 1099-A YES, personally liable for the repayment of the debt.
Box 2 $218,000 Balance of principal
Box 4 $233,088 FMV of property
So yes, FMV is more than Principal balance so I don't believe there will be a 1099-C issued at all.
The difference of the Purchase price and the balance of the principal is the equity debt he had taken out.
He also rented it out since 2009 and depreciation taken is about $13,000
Normally this would have a taxable gain. However, I am questioning that in this situation, he had filed bankruptcy and put the house in it.
So he did not receive a dime on this. So how do I report the 1099-A since it is a deemed sale?
Thanks!