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Lev
Lev, Tax Advisor
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Do I report , in my tax return, a 1099-S I received

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In 2008 I sold a home that I qualified for the $500K exemption -- completed worksheet 1 & 2 of Pub 523. The net gain was less than 500K so I do not have to list in schedule D.

I also received from the escrow office a 1099-S that reported the sales price of the home.

QUESTION:
1) Since I do not have to report the sale on Schedule D (because of the 500K exclusion) do I have to report the 1099-S on my 1040 tax return?

2) If I do have to report the 1099-S on my 1040 return, how is the sales price treated? As "information only"? As income? If income how do I show the "income" is not taxable because of the 500K exclusion?

As long as you qualify to exclude from your income all the gain from the sale of your main home - you do not need to report the sale transaction to the IRS.

Keep all worksheets, supporting documents and the form 1099-S for your record.

 

According to the IRS - see publication 523 page 18 - http://www.irs.gov/pub/irs-pdf/p523.pdf

Do not report the 2008 sale of your main home on your tax return unless:

  • You have a gain and you do not qualify to exclude all of it,

  • You have a gain and choose not to exclude it, or

  • You have a loss and you received Form 1099-S.

You may report the sale transaction if choose so - on the schedule D - see example in the publication 523 on the page 22

 

Let me know if you need any help.

 

Customer: replied 8 years ago.

March 11, 2009

 

Thanks for the quick response. I had read the pg 18 of Pub 523,-- it mentions 1099-S accociated with a loss. Silent about a 1099-S associated with a gain that is excluded.

 

So, just to be clear. Even though the 1099-S I received states the sales price is being reported to the IRS, I do not have to report the 1099-S on my 1040 return. The gain fron the sale does not have to be reported on sch D because of the 500K exclusion and the IRS will not expect to see the 1099-S reported on the 1040. Correct? Do you have a reference to any IRS publication?

 

I just do not want to get a letter from the IRS two years from now when their computer does not find a match between the 1099-S sent in by the escrow company and not reported on my 1040. (You probably will not be around to talk with).

 

Thanks,

Krazykat 3

The gain from the sale does not have to be reported on sch D because of the 500K exclusion and the IRS will not expect to see the 1099-S reported on the 1040. Correct?

Yes - that is correct - as long as that is your primary residence and there is no taxable gain - you are not required to report the sale transaction.

 

Do you have a reference to any IRS publication?

I provided the exact reference above - see publication 523 page 18 - http://www.irs.gov/pub/irs-pdf/p523.pdf

Do not report the 2008 sale of your main home on your tax return unless:

  • You have a gain and you do not qualify to exclude all of it,

  • You have a gain and choose not to exclude it, or

  • You have a loss and you received Form 1099-S.

If you want - you may report the sale transaction if choose so - on the schedule D - see example in the publication 523 on the page 22 - if you think that the IRS will ask you about that transaction - that will most likely be the answer on their question and assumably will prevent possible letters.

If you have any doubts - I suggest you to report - make your section 121 exclusion equal to your gain - for instance - if your gain is $420,000 - report section 121 exclusion negative $420,000.

 

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