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  1. #1
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    Mar 2013
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    Default Taxes on a 1099-a Received After Chapter 7 Bankruptcy

    I filed for Chapter 7 bankruptcy and included my 1st and 2nd mortgage (both from the same lender). I didn't receive a 1099-A or C from my first mortgage, but I did receive a 1099-A for my 2nd mortgage. The lender said that I am not liable for taxes but when I input the the information from the 1099-A into Turbo Tax its showing that I owe taxes on it. My bankruptcy was discharged before I received this 1099-A. From what I understand I don't owe taxes on bankruptcy discharges. On the 1099-A it says the balance of principal outstanding is 35k and the fair market value is 1.5k (it wasn't re-appraised), it also says under box 5 that the borrower was personally liable for repayment of debt. Please advise.

  2. #2
    Join Date
    Mar 2013
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    Default Re: Taxes on a 1099-a Received After Chapter 7 Bankruptcy

    Hire a tax pro instead of relying on software.

    The software often doesn't work when there is a complicated item tossed at it.

  3. #3
    Join Date
    Jul 2007
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    Florida
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    Default Re: Taxes on a 1099-a Received After Chapter 7 Bankruptcy

    Exactly. A 1099-A can imply a number of different things depending on the circumstances, and the software does not do a good job of sorting out those circumstances. There is a reason people pay knowledgeable professionals for their help. If you can't get the information to flow correctly in software, you can always use pen/paper if you understand the issue but just can't get it to flow right in the software.

  4. #4
    Join Date
    Oct 2006
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    16,474

    Default Re: Taxes on a 1099-a Received After Chapter 7 Bankruptcy

    Quote Quoting cashflow
    View Post
    I filed for Chapter 7 bankruptcy and included my 1st and 2nd mortgage (both from the same lender). I didn't receive a 1099-A or C from my first mortgage, but I did receive a 1099-A for my 2nd mortgage. The lender said that I am not liable for taxes but when I input the the information from the 1099-A into Turbo Tax its showing that I owe taxes on it. My bankruptcy was discharged before I received this 1099-A. From what I understand I don't owe taxes on bankruptcy discharges. On the 1099-A it says the balance of principal outstanding is 35k and the fair market value is 1.5k (it wasn't re-appraised), it also says under box 5 that the borrower was personally liable for repayment of debt. Please advise.
    You don't include the A on your tax return at all. You don't include anything until you get the 1099-C. The debt is not discharged until you get the 1099-C. Once you get the C you use form 982 to exclude the cancelled debt from income, based on bankruptcy.

    If you cannot make the software do that properly, you need a tax professional.

  5. #5
    Join Date
    Mar 2013
    Posts
    2

    Default Re: Taxes on a 1099-a Received After Chapter 7 Bankruptcy

    Should I put the amount stated under the 1099-A balance of principal outstanding on box 2 of Form 982 and check box 1a even though I don't have a 1099-C yet from the lender? Also why would the lender only send a 1099-A for the 2nd mortgage and not the first?

    - - - Updated - - -

    Why is there so much conflicting information about this subject? How do I report the 1099-A? Some say don't do anything others say it has to be reported as a sale. What is it?

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