TP received $5000 to compensate them (husband/wife) "in exchange for their cooperation in consenting to a final judgment of foreclosure." (quoted from the Limited Settlement Agreement I'm looking at.)
Would this be what everyone else is calling "Cash for Keys."? A search on this forum finds everyone saying this is Line 21 other income. Why not report the $5000 in the sales proceeds? TP says she didn't get a 1099-misc, but she did tell me she received $5000, and brought me the paperwork on the agreement. I do have the 1099-C for cancellation of debt.
Why isn't this income reported on the Sale of the Foreclosed home instead of Line 21? Since a foreclosure on their home has 2 transactions:
(1) cancellation of debt income, and
(2) Gain or loss on the sale
If it goes on the SALE, then it won't be taxable because it was their primary residence and TP has a loss.
Would this be what everyone else is calling "Cash for Keys."? A search on this forum finds everyone saying this is Line 21 other income. Why not report the $5000 in the sales proceeds? TP says she didn't get a 1099-misc, but she did tell me she received $5000, and brought me the paperwork on the agreement. I do have the 1099-C for cancellation of debt.
Why isn't this income reported on the Sale of the Foreclosed home instead of Line 21? Since a foreclosure on their home has 2 transactions:
(1) cancellation of debt income, and
(2) Gain or loss on the sale
If it goes on the SALE, then it won't be taxable because it was their primary residence and TP has a loss.
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