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My client received form 1099-A (Acquisition or Abandonment…

My client received form 1099-A...
My client received form 1099-A (Acquisition or Abandonment of Secured Property) under his corporation name. Where do we enter the amount in corporation return and how do we get exemption from this income like we do in 1099-C in personal return?
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Answered in 5 hours by:
3/16/2018
emc011075
emc011075, Tax adviser
Category: Tax
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Experience: IRS licensed Enrolled Agent and tax instructor
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Hi. My name is ***** ***** I will be happy to help you.

1099A is not cancellation of debt like 1099C. 1099A reports transfer of property to a new owner, in his case most likely the bank. You use information on 1099A to report sale or disposition of business asset. The sales price is lower of outstanding balance or FMV listed if the corporation was liable for the debt, or the outstanding balance if the corporation was not liable for the for debt. This my or may not result in capital gains, depending on acquisition price, depreciation and such. Unfortunately capital gains cannot be excluded.

1099A may be followed by 1099C - Cancellation of debt, depending on type of debt and state the business was incorporated (states have different rules when it comes to liability). The debt may be cancelled immediately or year or two later. Banks, if they can, try to recover the debt before they cancel it.

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Customer reply replied 1 month ago
real concern is that how and where to put this amount in the 1120 or 1120s and incase it generates any taxes how and where we can go in the form to mention FMV or outstanding balances so it evens out.

it goes on form 4797 and the net result goes on line 9 or 8 of 1120, depending on gains and/or depreciation recapture.

https://www.irs.gov/pub/irs-pdf/f4797.pdf

4797 is not an easy form, use a tax preparation program if you can.

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