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Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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We sold our home in a short sale in November of 2009. and are

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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
Expert:  Merlo replied 7 years ago.

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
Customer: replied 7 years ago.
Expert:  Merlo 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?





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



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