Bankruptcy Abandonment Form
Form 1099A Abandonment Foreclosure Do I really have to pay taxes on the diff between the FMV & my mortgage?
The FMV of the house is listed as $88,000 and the loan is $217,000. The house was in my name. I filed bankruptcy and did not reaffirm the property. It is business debt. Do I have to pay taxes as if I had $129,000 ($217K-$88K) in income? I don’t make enough to pay this much in taxes! I am so scared. Please help!
Dear Terri: The 1099-A is just the first step in a long process.
You do not do anything until you get a 1099-C. (cnx of debt) Then it depends on your state if you live in a recourse or non-recourse state. This determines the taxability of the cnx of debt. Since a lot of people are having issues with debt it would be wise to consult with a person familiar with the laws of your state and the Federal reporting steps.
Your home is always personal and not business debt.
There are several ways to exclude cnx of debt on your main home from income.
This advice was prepared based on our understanding of the tax law in effect at the time it was written as it applies to the facts that you provide. Click on my profile to read more. Errol Quinn Enrolled Agent
No related posts.
Related posts brought to you by Yet Another Related Posts Plugin.