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We sold our home in a short sale in November of 2009. and are

Customer Question
now paying a promissary note...
We sold our home in a short sale in November of 2009. and are now paying a promissary note for the difference. Do we have to claim the difference as income since we are obligated to pay it?
Submitted: 7 years ago.Category: Tax
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Answered in 2 minutes by:
3/1/2010
Tax Professional: Merlo, Accountant replied 7 years ago
Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9,783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
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Hello JA Guest,

 

Did you receive a 1099 form from the lender to report the short sale deficiency amount?

 

 



Edited by Merlo on 3/1/2010 at 9:24 PM EST
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Customer reply replied 7 years ago
yes
Tax Professional: Merlo, Accountant replied 7 years ago

Did you receive a 1099-a form or a 1099-c form?

 

Also, was this short sale on your primary residence?

 

 

 

 

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Customer reply replied 7 years ago
It is a 1099-c, and it was our primary residence. The amount of the difference is 94,213.32.
Tax Professional: Merlo, Accountant replied 7 years ago

Hello again JA Guest,

 

You will not need to pay tax on this amount, but you will need to account for this form on your tax return.

 

You need to file Form 982 with your return and check the box on line 1e to show that this debt related to our primary residency. Then on line 2 enter the amount of the canceled debt.

 

If this was helpful please press the Accept button. Positive feedback is also appreciated.

 

Thank you JA Guest

 

 

Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9,783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
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