Tag: accountant

  • How to account for losing real estate on your taxes

    22 October 2013 / Video Blog / Comments Off on How to account for losing real estate on your taxes

    Welcome to another edition of Tuesday Tidbits where we make tax and accounting simple. I'm your host Charles D. Shapero, CPA with Widget Bookkeeping & Tax and today we're going to talk about the unfortunate topic of losing real estate. We've heard it a lot, short sales, foreclosures does it have a tax impact? Well there's a lot of IRS forms that you've been seeing lately. The 1099-A, the 1099-C and how does that affect your tax return? Well the 1099-A really deals with the abandonment of a property, all it tells the IRS is that you lost a property, it doesn't really tell the IRS if the bank is going to come after you for the loan balance, or what gain or loss can be calculated on that transaction. So really with a 1099-A its what's called an open transaction, you can't really do anything with it, except know that something is on the horizon. The 1099-C however, is a totally different animal, 1099-C's as it relates to real estate means that the bank is going to forgive the loan on that piece of property. They are not going to come after you and sue you for the deficiency. That's a good thing. We don't want to repay that loan. Could it have tax impact? Yes it could, but generally it won't. Because you did pay something for that property. 1099-C's are also issue when a bank forgives a credit card loan. That is entirely taxable for the most part, unless...there is an exception one of the best tools in our arsenal to pull that income off your return is Form 982, it allows us to exclude forgiveness of debt in certain circumstances: bankruptcy, insolvency and there's a couple of other exceptions as well. So 982 can be very helpful in pulling that income off your return and lowering your tax bill. All those forms that I described can be found on our resources tab on the Widget website. This concludes todays Tuesday Tidbits, see you next Tuesday Widget Bookkeeping & Tax; Know More, Keep More.

Back to top