Looking for some clarity - I received a 1099A from my mortgage service provider in 2012 in regard to the foreclosure of my home, balance outstanding 106,000.00 - FMV 61346.00. they told me today they will NOT be sending me a 1099C which I've been waiting for to file 2012 taxes - then..... in 2013 I received a 1099C from the second mortgage holder - cancellation of debt 60,000.00======>>>>>>>>The 1099-A represents the surrender of the asset. It counts as a sale and you need to report the sale on form 8949/ sch D or 4797 if it's biz property. The 1099-C represents the actual cancellation of the debt. If you have, say, cancelled credit card debt, then yes, you may end up putting the amount of cancelled debt on line 21 of 1040. You can receive one or both of them. As the property lost in foreclosure/insolvency is a principal residence-literally the home in which you live-then the cancellation of the debt generally won't be taxable.
Not sure if the 2007 mortgage debt forgiveness act will apply to me and which year to file which forms - I've read all the IRS pubs in regard to insolvency=========>>>>>>>>>yes;the Act was introduced on Sep 25, 2007, and signed into law by President on Dec 20, 2007. This act offers relief to homeowners who would have owed taxes on forgiven mortgage debt after facing foreclosure. The act extends such relief for three years, applying to debts discharged in calendar year 2007 through 2009. With the Act of 2008, the tax relief was extended another three years, covering debts discharged through calendar year 2012. Act further extended until January 1, 2014.
also the original tax basis in my home - bought in 2002 - is actually 0 since my Dad quit claimed the deed to me - Dad bought the house for me while in the process of a divorce, once the divorce was final - I paid off the mortgage on the home so Dad could quit claim the deed to me and then took out a mortgage to repay Dad the difference he had put out on my behalf to buy and remodel it - so what is my real tax basis? both mortgages amounting to 166,000.00 or 0 plus improvements?===========>>>>>>>>> The IRS views quitclaim deeds as a gift, and applies guidelines for determining its basis using those standards: Instead of the home’s value being reevaluated when you receive it, your adjusted basis in the home is the same as the basis for your father holding the property before he filed the quitclaim deed. For example, if your father signs a quitclaim deed on his home, which is worth $200k on the market, but he purchased it for $35k and placed $25k in improvements on it, your adjusted basis is $60k, not $200k as if you inherited it.