We went through a Chapter 7 bankruptcy. It was discharged in June of 2019. A rental property which had been our primary residence for years was surrendered to Wells Fargo in the bankruptcy. Due to covid rules, Wells Fargo was delayed in taking back the property. They just bought it back at a public auction in 2023. They sent us two 1099-A forms for 2023. I'm assuming one was for the original loan and the other was for an equity line of credit we had taken out on the property. I'm not sure how to enter this on my tax return. I'm not even sure they should have sent it since it was surrendered in 2019 in the bankruptcy and was never simply abandoned. Can you help me figure this out? I'd really appreciate any help you could give. Thanks!
Generally, you would have to report forgiven debt as income on your tax return. However, if you had debt that was discharged through bankruptcy, you may be able to report the debt on IRS Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (see below). IRS Form 982 contains a provision for bankruptcy filers, which basically will allow you to report this to the IRS (since WF will send a copy of your Form 1099-As to the IRS as well), but then not have to include the income in your tax return. IRS Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness Article: www.teachmepersonalfinance.com/irs-form-982-instructions/ Video: ua-cam.com/video/_bJn-mYdB-I/v-deo.html
@@bonniej0 I do not know the answer to this question, and I'm not sure that I could give you advice here. You might need to talk with a bankruptcy attorney who can practice law in your state to determine what your options look like.
Hello, i just received 1099A Copy for a property i filed bankruptcy on in 2008. I also surrendered the property back then. Block 5 is not checked. It says i owed $500k and the fair market is $800k. I did not get any part of this sale. It was all the State, Bank, and another party making the profit. Should i be worried on paying taxes?
Generally, bankruptcy discharges are not considered taxable income, but still should be reported on IRS Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness. However, if you properly filed your tax return for 2008, then I'm not sure that there's a lot that you can do, since you can't file an amended return, and the IRS collection statute expiration date (CSED) is most likely lapsed. If you want a conclusive answer, you can always call the IRS or talk to an accountant about reporting this. But since there's little likelihood of any money being recovered (since it's generally considered nontaxable income in the first place), I'm not sure that I'd advise that. Here are some articles I wrote about Form 982, and the IRS CSED. IRS Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness Article: www.teachmepersonalfinance.com/irs-form-982-instructions/ Video: ua-cam.com/video/_bJn-mYdB-I/v-deo.html How to Find Out Your IRS CSED www.teachmepersonalfinance.com/how-to-find-out-your-irs-csed/
If you're the recipient of this form, you don't need to fill out anything. If you're completing this form, then you would enter identical information in all three versions of the form: 1 gets reported to the IRS, 1 gets sent to the recipient, and 1 is retained by the issuer.
We went through a Chapter 7 bankruptcy. It was discharged in June of 2019. A rental property which had been our primary residence for years was surrendered to Wells Fargo in the bankruptcy. Due to covid rules, Wells Fargo was delayed in taking back the property. They just bought it back at a public auction in 2023. They sent us two 1099-A forms for 2023. I'm assuming one was for the original loan and the other was for an equity line of credit we had taken out on the property. I'm not sure how to enter this on my tax return. I'm not even sure they should have sent it since it was surrendered in 2019 in the bankruptcy and was never simply abandoned. Can you help me figure this out? I'd really appreciate any help you could give. Thanks!
Generally, you would have to report forgiven debt as income on your tax return. However, if you had debt that was discharged through bankruptcy, you may be able to report the debt on IRS Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (see below).
IRS Form 982 contains a provision for bankruptcy filers, which basically will allow you to report this to the IRS (since WF will send a copy of your Form 1099-As to the IRS as well), but then not have to include the income in your tax return.
IRS Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness
Article: www.teachmepersonalfinance.com/irs-form-982-instructions/
Video: ua-cam.com/video/_bJn-mYdB-I/v-deo.html
Thanks!
@@bonniej0 What is your question?
@@bonniej0 I do not know the answer to this question, and I'm not sure that I could give you advice here.
You might need to talk with a bankruptcy attorney who can practice law in your state to determine what your options look like.
Hello, i just received 1099A Copy for a property i filed bankruptcy on in 2008. I also surrendered the property back then. Block 5 is not checked. It says i owed $500k and the fair market is $800k. I did not get any part of this sale. It was all the State, Bank, and another party making the profit. Should i be worried on paying taxes?
Generally, bankruptcy discharges are not considered taxable income, but still should be reported on IRS Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness. However, if you properly filed your tax return for 2008, then I'm not sure that there's a lot that you can do, since you can't file an amended return, and the IRS collection statute expiration date (CSED) is most likely lapsed.
If you want a conclusive answer, you can always call the IRS or talk to an accountant about reporting this. But since there's little likelihood of any money being recovered (since it's generally considered nontaxable income in the first place), I'm not sure that I'd advise that.
Here are some articles I wrote about Form 982, and the IRS CSED.
IRS Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness
Article: www.teachmepersonalfinance.com/irs-form-982-instructions/
Video: ua-cam.com/video/_bJn-mYdB-I/v-deo.html
How to Find Out Your IRS CSED
www.teachmepersonalfinance.com/how-to-find-out-your-irs-csed/
You’re the man.
Thank YOU David.
Do you fill out all 3 sections on the 1099-A form?
If you're the recipient of this form, you don't need to fill out anything.
If you're completing this form, then you would enter identical information in all three versions of the form: 1 gets reported to the IRS, 1 gets sent to the recipient, and 1 is retained by the issuer.
How do I make this work for UK?
Does this form apply to property taxes if at all?
No. Only lenders, such as mortgage companies or banks, would file this form.