Forms 1099-A and 1099-C Received for a Rental Property

If you received both a Form 1099-A Acquisition or Abandonment of Secured Property and a Form 1099-C Cancellation of Debt for a rental property, enter the Form 1099-C first to determine if the canceled debt is taxable. If it is, you must decide whether or not to file Form 982 Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) to exclude the canceled debt from income. If you do file Form 982 to exclude the canceled debt income, then you would need to reduce the basis in the rental property asset by the amount excluded.

The program will walk you through the entry of Form 1099-C and Form 982, but if necessary, you would need to manually adjust the basis on the asset in the depreciation section of the rental property Q&A.

Note. If the canceled debt is included in income (i.e. you do not file Form 982), then you would not need to reduce the basis in the property.

To access Form 1099-C in the TaxAct program, go to our Form 1099-C - Entering Cancellation of Debt in Program FAQ.

To report Form 1099-A on Schedule E (Form 1040) Supplemental Income and Loss in the TaxAct program (if you need help accessing Schedule E in the TaxAct program, go to our Form 1099-A - Foreclosure/Repossession FAQ):

  1. From within your Schedule E, continue with the interview process until you reach the screen titled Rental and Royalty Income - Property Type
  2. Select an option from the Property type drop-down.
  3. On the screen titled Rental Income - Disposal, click Yes.
  4. If you did not file Form 982, you will see a screen titled Rental Income - Canceled Debt reflecting the amount that will be included as rents received on Line 3 of Federal Schedule E. This is per the IRS instructions when canceled debt is taxable for a rental property.

Note. This is not done automatically by the program. You must manually adjust the cost basis in the asset section. You would then continue through that asset section entering the disposal information. Below is additional information on determining the correct information for those entries.

Use the Worksheet for Foreclosures and Repossessions in IRS Publication 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals) on page 13, to determine the entries for the following:

  • The Date sold will be the date shown in Box 1 (Form 1099-A).
  • The Sales proceeds will be the amount from Line 6 of the Worksheet for Foreclosures and Repossessions.
  • The Date acquired will be the date you purchased the property.
  • The Cost or other basis will be the amount from Line 7 of the Worksheet for Foreclosures and Repossessions. This would be the basis you had in the program lowered by any amount excluded on Form 982.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the webpage or document at the time it is accessed.