1099A and 1099C

[DLSINWEST]

I know this has probably been reviewed before but can someone please review 1099A and 1099C My client 8 rentals losing or has lost all of them. I now depreciation has to be recaptured do I treat properties as being sold? If so at what price I'm reading FMV but that would create a loss. PLEASE HELP

[Burke]

Foreclosure is treated as a sale or exchange. It can result in a gain or loss. Rental properties would go on 4797 with depreciation recapture. See TTB 14-10 for addl info on these as well as examples. Forms 1099A & C are also addressed.

[gkaiseril]

Forgiveness of Debt May Produce Taxable Income

Since a 1099-C has been issued there maybe taxable income created for the amount of the mortgage debt forgiven. Your client could write down personal assets, but with multiple foreclosures you client probably will not get out from under the problem unless your client is insolvent or is in bankruptcy.

[myerstaxes]

When To Report Foreclosure

I have read and been told conflicting reporting requirements for 1099A vs 1099C...It has been my understanding that when a 1099A has been issued (lender has taken possession of property) that there is no reporting requirements for the borrower who lost the property...Yet I have heard and have a client who received a 1099A in 2006 and as of now has yet to receive a 1099C...Some tax pros that I have spoken with state that in their experience there will be no 1099C after the 1099A since a lot of lenders are not following up with a 1099C if the property is sold for the FMV or at least the balance due and owing at the time they issued the 1099A...
So I am wondering, should we go ahead and report the 1099A as a sale and later amend if a 1099C comes out showing different information...OR just wait until a 1099C is issued? and if so if a 1099C is never issued, then what are our reporting requirements on behalf of our clients?
I am in a hot bed of foreclosures where I am, so this issue will be coming up over and over again for me...I have many clients who will not be about to use Section 121 because the properties they are losing are rentals...Any sage advice for those who have been in the business for a long time and experienced these matters is greatly appreciated...These past few years are my first experiences...

[solomon]

It has been my understanding that when a 1099A has been issued (lender has taken possession of property) that there is no reporting requirements for the borrower who lost the property

This is a reportable sale.

[myerstaxes]

That is how I reported it

Thanks, I have reported it as such last year and now this year on another client...