Discussion:1099C and IRS transcripts

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{{ForumReplyPost|UserID=DebP|Date=8 April 2014|Text=I believe my client's 1099-C was also issued in error - she had a house foreclosed on with only nonrecourse debt. At least that is what she is saying - never refinanced (and she didn't know where I was going with the question).  However, box "5" states that the borrower was personally liable.  I don't want to show it on the return at all - personal loss on the sale of a residence which wouldn't even be reportable.  But I might have a matching issue - are people just entering on Line 21 and then backing out again?  The 1099-C actually went to her ex-husband in 2013.  Divorce was finalized in 2012. i know it's 1/2 hers - but maybe I won't have a matching issue to even worry about this? }}
{{ForumReplyPost|UserID=DebP|Date=8 April 2014|Text=I believe my client's 1099-C was also issued in error - she had a house foreclosed on with only nonrecourse debt. At least that is what she is saying - never refinanced (and she didn't know where I was going with the question).  However, box "5" states that the borrower was personally liable.  I don't want to show it on the return at all - personal loss on the sale of a residence which wouldn't even be reportable.  But I might have a matching issue - are people just entering on Line 21 and then backing out again?  The 1099-C actually went to her ex-husband in 2013.  Divorce was finalized in 2012. i know it's 1/2 hers - but maybe I won't have a matching issue to even worry about this? }}
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{{ForumReplyPost|UserID=Kevinh5|Date=8 April 2014|Text=Debp, what state was the client's residence in?  In my state, mortgages are recourse by default.}}

Revision as of 11:43, 8 April 2014

Discussion Forum Index --> Basic Tax Questions --> 1099C and IRS transcripts


Discussion Forum Index --> Tax Questions --> 1099C and IRS transcripts

CAI (talk|edits) said:

24 June 2010
I ordered Wage and Income transcripts from the IRS.

On the these transcripts next to "Was the borrower personally liable for repayment of the debt" there is neither a yes or a no.

Does anyone know if this denotes a "no" ?

Otherwise is this more a less a data entry error or a to be determined item?

Kevinh5 (talk|edits) said:

24 June 2010
the problem is you don't know whether the checkbox is intentionally blank or by error blank


can you tell based on the type of debt or by asking the taxpayer about it?

for instance, auto debt is almost always 'yes', but purchase money mortgages on principal residences in certain states are 'no' while in other states almost always 'yes'

CAI (talk|edits) said:

24 June 2010
was a mortgage for taxpayer's principal residence, however here is the caveat - the taxpayer owned another home beforehand with the spouse. The taxpayer has since done a short sale and moved back in with the spouse in the home they had jointly.

Both homes in California

EZTAX (talk|edits) said:

24 June 2010
CAI - As others have said on this forum, it is probably not a good idea to rely on the banks reporting on these documents. We have seen many (most?) in error. Sounds to me like non-recourse loan if never refinanced. I am sure others will chime in.

DaveFogel (talk|edits) said:

25 June 2010
EZTAX is correct. You can't rely on the information on Form 1099-C. Under section 580b of the California Code of Civil Procedure, if the loan was obtained to purchase the property, and the property was owner-occupied (personal residence), then the loan was nonrecourse. On the other hand, if the original loan was refinanced, or is a home equity loan, or a second mortgage taken out after the original purchase, then it's likely that it's recourse.

DebP (talk|edits) said:

8 April 2014
I believe my client's 1099-C was also issued in error - she had a house foreclosed on with only nonrecourse debt. At least that is what she is saying - never refinanced (and she didn't know where I was going with the question). However, box "5" states that the borrower was personally liable. I don't want to show it on the return at all - personal loss on the sale of a residence which wouldn't even be reportable. But I might have a matching issue - are people just entering on Line 21 and then backing out again? The 1099-C actually went to her ex-husband in 2013. Divorce was finalized in 2012. i know it's 1/2 hers - but maybe I won't have a matching issue to even worry about this?

Kevinh5 (talk|edits) said:

8 April 2014
Debp, what state was the client's residence in? In my state, mortgages are recourse by default.
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