Form 1099-A, Acquisition or abandonment of secured property

By | March 5, 2014

Form 1099-A, Acquisition or Abandonment of Secured Property (Acquisition or abandonment of secured property), and Form 1099-C, Cancellation of Debt (debt cancellation)

If you get a loan from a lender to purchase a property, the lender may require that the loan is guaranteed with the acquired property. If you transfer an interest in the secured property to the lender (as in a foreclosure) or abandons the property, you may be required to treat the transfer or abandonment as a sale of the property. If the lender acquires an interest in secured property or has reason to know that you left the secured property, or failed to use it permanently, the lender should send you a Form 1099-A.


IRS Form 1009-C

When you borrow money, it is not necessary to include the loan proceeds in gross income, as it has the obligation to repay the lender later. If that obligation is subsequently canceled, you may be required to include the amount of canceled debt in your gross income. A commercial lender cancels a debt issue a Form 1099-C, Cancellation of Debt (debt cancellation), in English, to declare the cancellation.


IRS Form 1009-A

On Form 1099-A, the lender states the amount owed (principal only) and the fair market value of the secured property. You, who is the debtor uses these values ​​to determine whether you have a gain or a loss to dispose of the property. On the Form 1099-C, the lender declares the amount of debt canceled. If the acquisition of an interest in secured property lender (or abandonment of the property by the debtor) and debt cancellation occur in the same calendar year, the lender may only issue a Form 1099-C. See Topic 431 , which contains additional information on the Form 1099-C.

Form 1099-A, Acquisition or abandonment of secured property

If you receive a Form 1099-A or Form 1099-C and the information is incorrect, contact the lender to make the necessary corrections. For more information about foreclosures and abandonments, seePublication 544 , Sales and Other Dispositions of Assets (Sales and other disposals of assets).


IRS Publications on Cancellation of Debt

In some situations, you can exclude income from the total or partial cancellation of a debt. For example, if you have income from the cancellation of debt on their principal residence, you may exclude from income canceled part of the amount or the full amount. For more information, see Publication 4681 , Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals) (Cancelled Debts, Foreclosures, Repossessions and dropouts (for individuals)) and Instructions for Form 982 , Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) (Decrease of tax attributes due to the release of debt (and the adjustment to the basis under section 1082)).