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Received a 1099-a on vacation deeded property that we let…

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Received a 1099-a on...

Received a 1099-a on vacation deeded property that we let Wyndham have back on 3-2-17. on the form it is checked that the borrower was personally liable for repayment of debt and that the principal outstanding is $48322.96 with a fair market value of $193682.60. We did not receive a 1099-c, so what do we do on our taxes?

Accountant's Assistant: The Accountant will know how to help. Is there anything else the Accountant should be aware of?

Not that i know of

Submitted: 4 months ago.Category: Tax
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Customer reply replied 4 months ago
are you there
Answered in 2 hours by:
3/10/2018
Tax Professional: Shan-Nel Simmons, Enrolled Agent replied 4 months ago
Shan-Nel Simmons
Shan-Nel Simmons, Enrolled Agent
Category: Tax
Satisfied Customers: 43
Experience: Tax Pro and Founder at Nel's Tax Help,LLC
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From the IRS...

"Certain lenders who acquire an interest in property that was security for a loan or who have reason to know that such property has been abandoned must provide you with this statement. You may have reportable income or loss because of such acquisition or abandonment. Gain or loss from an acquisition generally is measured by the difference between your adjusted basis in the property and the amount of your debt canceled in exchange for the property, or, if greater, the sale proceeds. If you abandoned the property, you may have income from the discharge of indebtedness in the amount of the unpaid balance of your canceled debt. The tax consequences of abandoning property depend on whether or not you were personally liable for the debt. Losses on acquisitions or abandonments of property held for personal use are not deductible. See Pub. 4681 for information about your tax consequences"

Here is the link to publication 4681 https://www.irs.gov/pub/irs-pdf/p4681.pdf. It sounds like you have recourse debt and unless you qualify to exclude this debt, you will need to report it as other income as a cancelled debt income. Here is an excerpt from publication 4681:

"Recourse debt. If you abandon property that secures a debt for which you are personally liable (recourse debt) and the debt is canceled, you will realize ordinary income equal to the canceled debt. You must report this income on your tax return unless one of the exceptions or exclusions described later applies... This income is separate from any amount realized from the abandonment of the property."

To give you a more specific answer will require more work and you should consult with an accountant or tax professional.

I hope this helps. Please leave a five star rating and have a great day!

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