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

Resolved Question:

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?
Submitted: 5 years ago.
Category: Tax
Expert:  Lev replied 5 years ago.

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 5 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

Expert:  Lev replied 5 years ago.

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.

 

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 23196
Experience: Taxes, Immigration, Labor Relations
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