Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax

How is the gov going to deal with all the folks who receive

Customer Question
1099's from their lenders for...
How is the gov going to deal with all the folks who receive 1099's from their lenders for the forclosed properties? In our case it would increase our reported 'income' from $30K to well over $150K. Like so many others, we don't have the write off's (we're retired living on SSI) to offset and don't have the money to pay the taxes on that income.
Submitted: 8 years ago.Category: Tax
Show More
Show Less
Ask Your Own Tax Question
Answered in 1 minute by:
12/2/2008
Tax Professional: Lev, Tax Advisor replied 8 years ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,137
Experience: Taxes, Immigration, Labor Relations
Verified

Was part of your debt forgiven?

Did you receive 1099-C or any other forms? Please clarify?

 

Ask Your Own Tax Question
Customer reply replied 8 years ago
<p>We are told that we <u>will be</u> sent a 1099 representing the difference between what they (the lender) sell the property for and what we owe on it. The property WAS worth approx $600K....now a 'fair market appraisal' tells us it's only worth $350K. The loan on it is $480,000. Therefore they say that after the sale we will receive the 1099 for aproximately $130K or more (depending on the final outcome of the transaction). How do we avoid this 'income' and how is IRS going to deal with this for so many??</p><p> </p><p>The sale has not been consumated YET. But the property is in Forclosure. It could be sold for very little IF it's sold on the court house steps.........If it sells to a potential buyer whom we know...it could sell for the Fair Market Value. </p><p> </p><p>Is there any 'new' news on how the IRS is going to deal with situations like this? Where the income is based on the foreclosure of homes...........or perhaps from credit card debt that becomes 'income'?</p>
Customer reply replied 8 years ago
I'm still waiting.
Tax Professional: Lev, Tax Advisor replied 8 years ago

If you sell short - means the sale for less than the debt outstanding that is secured by the property - reportable on 1099-S - http://www.irs.gov/pub/irs-pdf/f1099s.pdf - should be treated as disposition of the property at the sale price.

The foreclosure itself - reportable on 1099-A - http://www.irs.gov/pub/irs-pdf/f1099a.pdf should be treated as disposition of the property at fair market value.

If the creditor sells the property after foreclosure - the person may receive both these forms.

 

If the creditor decides that the debt may not be collected - all or part of the debt may be forgiven. The amount of debt forgiven reportable on 1099-C - http://www.irs.gov/pub/irs-pdf/f1099c.pdf - generally is taxable, unless an insolvency exemption apply -- you should file a form 982 - to proof your insolvency - and might exclude all or part of canceled debt from taxable income.

This is true even if you did not file for bankruptcy.

Please see the IRS Publication 908 Bankruptcy Tax Guide - http://www.irs.gov/pub/irs-pdf/p908.pdf - with example of the form 982 on the last page.

 

The Mortgage Forgiveness Debt Relief Act of 2007 signed at the end of the last year provides additional relief - http://www.govtrack.us/congress/bill.xpd?bill=h110-3648 that allows exclusion of income realized as a result of modification of the terms of the mortgage, or foreclosure on your principal residence.

The Act applies to qualified debt forgiven in 2007, 2008 or 2009 - and only to forgiven or canceled debt used to buy, build or substantially improve your principal residence, or to refinance debt incurred for those purposes.

The amount of debt forgiven still must be reported on Form 982 and the Form 982 must be attached to your tax return.

 

Please be advised that you have only 6 month after tax return is due to file 982 form.

 

Ask Your Own Tax Question
Customer reply replied 8 years ago
This is not our PRIMARY residence. Does all of this still apply?
Tax Professional: Lev, Tax Advisor replied 8 years ago

If that is not your primary residence - The Mortgage Forgiveness Debt Relief Act of 2007 would not help,

but an insolvency exemption still may be used -- you should file a form 982 - to proof your insolvency - and might exclude all or part of canceled debt from your taxable income.

 

Please be aware if you have not timely file the form 982 with your tax return - you still have 6 more month to add it.

 

Ask Your Own Tax Question
Customer reply replied 8 years ago
I've already done an acceptance.............last night - 12-3-08.
Tax Professional: Lev, Tax Advisor replied 8 years ago

Unfortunately - the answer is not accepted.

 

I would appreciate you accept it now - as that is the only way I would be credited.

 

If there is any problem - please email customer service at [email protected].

Ask Your Own Tax Question
Ask Lev Your Own Question
Lev
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,137
30,137 Satisfied Customers
Experience: Taxes, Immigration, Labor Relations

Lev is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,310 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,695 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
Suppose my taxable income in 220,000 this year and the tax
Suppose my taxable income in 220,000 this year and the tax rate is X up to 200K, but Y for 200and over, do I pay Y on the full 220K or just that above 200K? … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Can I report rental income in my tax return on a property
Can I report rental income in my tax return on a property thar is owned by my father? He does not live in the US is not a US citizen and can sign a document to allow me to receive the rental… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
Why form a Subsidiary S Corp. Why not just form a new S
Why form a Subsidiary S Corp. Why not just form a new S Corp … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
For form 1099-A what happens when the amount of the loan is
For form 1099-A what happens when the amount of the loan is less than the FMV of the property?… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
727 satisfied customers
Under current law a 100,000 taxable income pays $10,365 plus
Under current law a 100,000 taxable income pays $10,365 plus 25% of the amount exceeding $79,400 i.e. about $16,000. Under tax reform will the tax be $25,000? … read more
Lev
Lev
Tax Advisor
30,137 satisfied customers
1099-R with distribution code 3. Can I get an earned income credit?
If someone receives a 1099-R with a distribution code 3, can they qualify for earned income credit? The person receives his pension because he became disabled.… read more
Bizhelp
Bizhelp
Certified Public Accountant (CPA)
Bachelor's Degree
638 satisfied customers
I got a 1099 A of a rental property with information on Box
I got a 1099 A of a rental property with information on Box 2 and Box 4 how do I report it on my tax… read more
Lev
Lev
Tax Advisor
30,137 satisfied customers
If your taxable income is $0 (actually negative) is there a
If your taxable income is $0 (actually negative) is there a penalty for late filing? Do you need to file at all? What is the 2016 filing deadline with an extension?… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,466 satisfied customers
Is an inheretance taxable income. What do you want to know?
What do you want to know? My question: is an inheritance a taxable income? … read more
abci168
abci168
Principal
27 satisfied customers
For the related 2015 return do we create 1099's now or just
For the related 2015 return do we create 1099's now or just list as an expense for the event costs and not include 1099's. Mark… read more
abci168
abci168
Principal
27 satisfied customers
I have no taxable income. I am 60 years pf age and a
I have no taxable income. I am 60 years pf age and a caregiver to my special needs daughter. She has a trust fund which pays me to be able to stay home and not work. I also receive SSI for being mothe… read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
A friend receives taxable income that he can characterize
A friend receives taxable income that he can characterize EITHER as self-employment or non-SE. If he chooses the SE route, it will increase his Social Security payment, almost immediately as he is on … read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,217 satisfied customers
Undistributed taxable income previously taxed. Have 3
Undistributed taxable income previously taxed. Have 3 shareholders with balances due to them from previous years. Can it be paid all in one year to bring their amounts owing to zero until the next pro… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,217 satisfied customers
Can franking credit on an Australian income tax return be
Can franking credit on an Australian income tax return be used on Form 1116 as tax paid on the franked distributions? … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
I filed a joint return through TurboTax. My taxable income
I filed a joint return through TurboTax. My taxable income was $87,829. Using the IRS's published tax rate schedule, the tax I owe should be $13,499.25. TurboTax calculated I owe $17,787 (this compare… read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
Are you familuar with 4797 form? is it possible to write off
is it possible to write off a loss on a real estate property from 2011? … read more
Lev
Lev
Tax Advisor
30,137 satisfied customers
Is 1099 g from Hawaii taxable income to IRS? Hawaii refunds
Hawaii refunds some sales tax paid for low income elderly like me. … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Ax return was rejected for last years taxable income as
ax return was rejected for last years taxable income as being incorrect (Line 37). A review of my tax copy and computer data showed the same number as we claimed. … read more
Phillips Esq.
Phillips Esq.
Attorney
Juris Doctor
17,979 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x