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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16544
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Foreclosure. 1099 A. If the lender issues a 1099 A, and the

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Foreclosure. 1099 A. If the lender issues a 1099 A, and the Loan balance (say $412,000) is the same as the FMV Sale balance (say $412,000) ... then there would be no capital gain ... correct ? The reason for the question, we are in lender give back the house mode ... and they may agree to make the figures the same ... so less capital gain for me. what boxes are the FMV Box (box 4 ? )and the loan balance box on the 1009 A ... and what else should we be aware of on the 1099 A.

Megan C :

Thank you for your question, and thanks for using JustAnswer.com

Megan C :

How are you today?

Customer:

great

Megan C :

Whether or not you have a capital gain depends on whether or not what you purchased the house for is less than or greater than the FMV at the date of foreclosure

Megan C :

It has nothing to do with the loan balance

Customer:

ok. I thought this may ... "May" help in that if the lender says they got the property and it is worth / fmv the loan ... then they will not issue a 1099 c ... since the 1099 A says the home was worth equals the loan balance ... and all this sale / fmv value is on the 1099 A. furhter ... all sale / fmv on 1099 A may be capital gain ... where as the 1099 c would be ordinary income. in this secnario ... the more on the 1099 A and less on the 1099 c ... makes sense (ie. capital gain over 1 yr is better) .... correct ?

Megan C :

The 1099-A and 1099-C are two different things

Megan C :

And you only have 1099-C income to the extent that there is an unpaid balance after the foreclosure takes place. And, if it's non recourse debt then there is no cancellation of debt income

Customer:

looks like it is better to have no 1099c or the less 1099 c the better ... correct

Megan C :

That is correct

Customer:

and ... what is the generic or typical case ... when the mtg lender does not have to issue a 1099 C

Megan C :

If they don't have to issue a 1099-C they just don't issue it

Customer:

when is the typical case ... when they do not have to issue one. can be a generic case / answer

Megan C :

If the loan is non-recourse or if the value of the property satisfies the debt

Customer:

ok. this looks like ... if the 1099 A ... has both the FMV and the loan balance the same ... and they say the value satisfies the debt ... then they may not have to issue a 1099 C ... correct

Megan C :

That is correct

Customer:

great. you were very helpful. done. by. and I will give you an excellant rating

Megan C :

Thanks so much!

Megan C and other Finance Specialists are ready to help you
Thanks Ross for your positive rating. Please come back and visit MyVirtualCPA for any of your tax, finance, or social security needs. It was a pleasure working with you today.