If you received a Form 1099-A, the first thing you must do is determine whether there has actually been a cancellation of debt. The lender should have sent you a Form 1099-C Cancellation of Debt if any debt was canceled. If you have not received a Form 1099-C, you may want to contact your lender to determine if any debt has been canceled.
Foreclosure/Repossession
The foreclosure or repossession of property is treated as a disposition of property from which you may realize gain or loss. Use the Worksheet for Foreclosures and Repossessions on page 12 of IRS Publication 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals), to compute the amount of any gain or loss to claim.
Where you enter your 1099-A information depends on whether the form you received is for your main home, business property, or investment property.
Main Home
If this was a foreclosure of your main home:
- From within your TaxAct® return (Online or Desktop), click on the Federal tab. On smaller devices, click in the upper left-hand corner, then select Federal.
- Click Investment Income to expand the category and then click Gain or loss on the sale of investments
- Click Sale of your main home
- Click Yes twice
- The program will proceed with the interview questions for you to enter or review the appropriate information
On the screen
Sale of Main Home - Date Acquired/Sold, please have a copy of your Form 1099-A and a completed copy of the Worksheet for Foreclosures and Repossessions (see above):
- Date Sold will be the date shown in Box 1 (1099-A)
- Date Acquired will be the date you purchased the property
- Enter the period of nonqualified use (if applicable in your situation)
On the screen
Sale of Main Home - Selling Price: The
Sales price will be the amount from Line 6 of the Worksheet for Foreclosures and Repossessions
On the screen
Sale of Main Home - Basis of Home: The
Purchase price will be the amount you paid for the home. Any additions or decreases to the basis should also be entered on this screen.
Any gain computed (that is not excluded due to this being your main home) will be taxable. A loss will not be deductible on your return, since it is personal-use property.
Business Use
To enter the gain or loss for business property, use the Sale of Business Property Worksheet in the appropriate business section (Schedule C, E, or F).
- From within your TaxAct return (Online or Desktop), click on the Federal tab. On smaller devices, click in the upper left-hand corner, then select Federal.
- Click Business Income (or Rent or Royalty Income, if applicable) to expand the category and then click Business income or loss from a sole proprietorship, Farming income or loss, or Real estate rental income, whichever applies in your situation
- Click Add to create a new copy of the form or Review to review a form already created, and if those options are not available, the program will proceed with the interview questions for you to enter or review the appropriate information
Investment Use
To enter the gain or loss for investment related property (on Schedule D):
- From within your TaxAct return (Online or Desktop), click on the Federal tab. On smaller devices, click in the upper left-hand corner, then select Federal.
- Click Investment Income to expand the category and then click Gain or loss on sale of investments
- Click Capital gain or loss (Form 1099-B)
- Click Add to create a new copy of the form or click Review to review a form already created
- The program will proceed with the interview questions for you to enter or review the appropriate information
- On the screen titled Investment Sales - Transaction Details, please have a copy of your Form 1099-A and a completed copy of the Worksheet for Foreclosures and Repossessions (see above).
Enter the transaction information:
- Please enter an appropriate description.
- The Date acquired will be the date you purchased the property.
- The Date sold will be the date shown in Box 1 (Form 1099-A).
- The Cost or other basis will be the amount from Line 7 of the Worksheet for Foreclosures and Repossessions.
- The Sales proceeds will be the amount from Line 6 of the Worksheet for Foreclosures and Repossessions.
If this is personal property (possibilities are a vacation home, timeshare, vehicle and some inherited property):
Continue to the screen titled Investment Sales - Adjustment Codes and select Code: L-Other Non-Deductible Loss (including Personal Loss) from the drop down menu to indicate the property is personal-use property. Any gain computed will be taxable; a loss will not be deductible on your return, since it is personal-use property.
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