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emc011075, Tax adviser
Category: Tax
Satisfied Customers: 3173
Experience:  IRS licensed Enrolled Agent and tax instructor
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We sold our primary residence in a short sale in 2012. we

Customer Question

we sold our primary residence in a short sale in 2012. we received a 1099S from escrow company showing the total amount of $880,000 as gross proceeds. we received a 1099C from our creditor of the house showing $830,000 as fair market value of property
with $270,664.99 as amount of debt discharge which together is total amount we owed on house. the creditor received $830,000. how do we show this on our 1040X amended tax return as we did not put it on the original tax return?
Submitted: 2 years ago.
Category: Tax
Expert:  emc011075 replied 2 years ago.

Hi. My name is ***** ***** I will be happy to help you.

There are two taxable events here: Sale of the primary residence and cancellation of debt. Because you received 1099S, you will have to report the sale on form 8949. It looks like you sold the house with a loss (the purchase price was more than 880K). Because you cannot claim loss on personal residence, you will have to make an adjustment in columns f and g to get the column H to 0. Your adjustment code will be H.

Regarding 1099C, if you received it in 2012, you can exclude the amount under The Mortgage Forgiveness Debt Relief Act. You will use form 982 to claim it. None of those changes will affect your 1040X, your return will be same.

Let me know if you need help with the forms or have any questions.

Expert:  emc011075 replied 2 years ago.

I see you read my respond. Do you have any questions? Is there anything else I can help you with today.

And if this answered your question, please take a moment to rate my response so that I may receive credit for assisting you today. However, if you need clarification, or want to discuss this issue further, let me know. Thank you.