Tax Law (Questions About Taxes)/1099A on rental property

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QUESTION: I received a 1099A on a rental property. FMV is under the balance of the loan. Do I report this as a sale? Do I use the FMV as the sale amount? and where do I report this on my taxes? Thanks

ANSWER: Jesus,

Thanks for your question.

Yes, you do report it as as sale.  The amount of cancelled debt is your sale price and your gain or loss is the difference in the sale price and your adjusted basis in the property.

The cancelled debt will be reported on Form 982.  The sale will be reported on Form 4797.

Hope this helps.

John Stancil, CPA

---------- FOLLOW-UP ----------

QUESTION: John,

Thanks for responding to my email so promptly.

I'm not sure if this is correct but I was told the debt has not been cancelled because I did not receive a 1099C.
The 1099A shows loan balance 184k and FMV 155k
Which amount should I use as the sale price?
Do I still use form 982? I also read something about line 21 on the 1040, which through me off

Any clarification will be great.

Thanks

Answer
Jesus,

You are correct, you do not have cancellation of debt income at this point.

You report the sale on Form 4797. The selling price will be the fair market value or the amount of debt owed, depending on state law where the property was located.  To determine your gain or loss, subtract the adjusted basis from the sale price.  The adjusted basis is your original cost plus capital improvements minus any depreciation allowed or allowable.  There will be a special tax treatment of any depreciation recapture.

You do not need Form 982 until you receive a 1099C.  At that time complete Form 982, then carry the taxable COD income to line 21.

Hope this helps.

John Stancil, CPA  

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John Stancil, CPA

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I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

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The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

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DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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