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1099-C, I feel i paid for my debt in full
My partner an i purchased a land for $500K some 10 years ago.
Each of us paid 150K cash and and had a Seller financed Loan of 200K secured by the Note on the land with 6 per cent interest. We paid interest all these years.
in 2017 we signed a Deed in lieu of Foreclosure : returned the Land with FMV of 189K and paid cash of 11K thus making 200K.
The Seller is going to file 1099-C for 189K with each of us responsible for 94.5K
What is my exposure tax wise?
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1099-C, I feel i paid for my debt in full
the IRS typically classifies cancelled debt as income because you received a asset when you purchased and you never paid it back. However there are exceptions such as bankruptcies, read here:
The TT interview should walk you through reporting and if you qualify for any exceptions.
To enter your 1099-C:
- Open (continue) your return, if it's not already open.
- In the TurboTax program, search for 1099-C or 1099C (lower-case also works) and then click or tap the "Jump to" link in the search results.
- Select the type of cancelled debt (main home or other) and then click or tap Continue.
- If using Free Edition, follow the prompts to upgrade to Deluxe.
- Follow the onscreen instructions to enter information from your 1099-C.
Exclusions from Income for:
- Cancellation of qualified principal residence indebtedness, better known as mortgage debt relief (this expired but if debt cancellation was agreed to by 12/31/16 you may be in luck)
- Debt cancelled in a Title 11 bankruptcy;
- Debt cancelled during insolvency (the amount exceeding your assets);
- Cancellation of qualified farm or real property indebtedness.
If the debt qualifies for any of these exclusions, TurboTax will complete Form 982 and include it with your return.
I hope this was helpful?
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1099-C, I feel i paid for my debt in full
the IRS typically classifies cancelled debt as income because you received a asset when you purchased and you never paid it back. However there are exceptions such as bankruptcies, read here:
The TT interview should walk you through reporting and if you qualify for any exceptions.
To enter your 1099-C:
- Open (continue) your return, if it's not already open.
- In the TurboTax program, search for 1099-C or 1099C (lower-case also works) and then click or tap the "Jump to" link in the search results.
- Select the type of cancelled debt (main home or other) and then click or tap Continue.
- If using Free Edition, follow the prompts to upgrade to Deluxe.
- Follow the onscreen instructions to enter information from your 1099-C.
Exclusions from Income for:
- Cancellation of qualified principal residence indebtedness, better known as mortgage debt relief (this expired but if debt cancellation was agreed to by 12/31/16 you may be in luck)
- Debt cancelled in a Title 11 bankruptcy;
- Debt cancelled during insolvency (the amount exceeding your assets);
- Cancellation of qualified farm or real property indebtedness.
If the debt qualifies for any of these exclusions, TurboTax will complete Form 982 and include it with your return.
I hope this was helpful?
***Say "Thanks" by clicking the thumb icon in a post and that I solved your question
**Mark the post that answers your question by clicking on "Mark as Best Answer" I am NOT an expert and you should confirm with a tax expert.
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1099-C, I feel i paid for my debt in full
I do not understand The Seller's/Lender's overall benefits: It got 300K cash for the property upon closing plus 13 years x 9K = 117 K of interest paid by us plus returned property evaluated as FMV of 189K + 11K (cash) but we as partners are responsible for 189K taxwise, not to mention property tax plus maintenance all these years that we paid. Where is our income? What about IRS publication 4681 saying' the ordinary income from the cancellation of debt over the FMV of the property must be included in your gross income". I assume we are responsible for only 11K but we paid it back to the Lender. Appreciate your comments. Thanks.
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1099-C, I feel i paid for my debt in full
***Say "Thanks" by clicking the thumb icon in a post and that I solved your question
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1099-C, I feel i paid for my debt in full
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1099-C, I feel i paid for my debt in full
Full amount of 200K and forgave nothing. The FMV is 189K, he got it and 11K in cash, so full amount of debt on the Note.
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1099-C, I feel i paid for my debt in full
For a foreclosure, execution, or similar sale, enter the
FMV of the property. See Temporary Regulations section
1.6050J-1T, Q/A-32. Generally, the gross foreclosure bid
price is considered to be the FMV. If an abandonment or
voluntary conveyance to the lender in lieu of foreclosure
occurred and you placed an “X” in the checkbox in box 5,
enter the appraised value of the property. Otherwise,
make no entry in this box.
Then TT will take the box 4 amount into consideration.
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1099-C, I feel i paid for my debt in full
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1099-C, I feel i paid for my debt in full
We asked the Lender to send us a copy.
As such i have not entered anything in my TT. I am still researching.
This was an investment property, actually it is a piece of land in FL, while i am residing in WA. As i take it i can offset my losses with any gains on the investments in the current year. Otherwise i could deduct 3K per annum only with the balance to be carried over. Right? As such, can my losses of 150 K be offset by 1099-C amount of 94.5 if any? Thanks.
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1099-C, I feel i paid for my debt in full
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1099-C, I feel i paid for my debt in full
***Say "Thanks" by clicking the thumb icon in a post and that I solved your question
**Mark the post that answers your question by clicking on "Mark as Best Answer" I am NOT an expert and you should confirm with a tax expert.
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