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Cancellation of debt income on a foreclosure with a 1099A?
Do I have cancellation of debt income on a foreclosure if I received a 1099A from the lender and not a 1099C?
Can the lender send me a 1099C later? Next year?
2 Answers
- 1 decade ago
The 1099-A advises you of the proceeds of the sale and the FMV at that time. You report the sale and any gain as if it had been traditional sale. There may or may not be a taxable or non-taxable gain or a non-deductible loss.
This is separate from the issue of COD income. That does not happen until the year that the 1099-C is cut and that can be several years in the future. You address the potential COD in the tax year that it is cut for.
The 1099-C is cut in the year that the debt (recourse mortgage only) is forgiven. If it's a non-recourse mortgage your debt is limited to what the lender sells the property for so there is no lingering debt to be forgiven.
You also man need the 1099-A if a 1099-C is cut in the future. Any COD income could be further limited by the difference between the outstanding balance on the loan and the FMV of the property at the time of foreclosure.
