1099-A Tax Help

[TaxHelpPlease]

What is the name of your state (only U.S. law)? Indiana

Hello. I am desperate for help regarding a 1099-A form. I've yet to receive all of my tax documents, but I can't figure out what to do with this 1099-A. First off, we did not abandon this property. We were in the process of moving out, and the lender sent some one to lock up the property 5 days prior to the sherrif's sale. This home was our primary residence. We've received a 1099-A stating in box 1 that the balance of the outstanding principal is $125,769.98 and in box 2 that the FMV is $87,500.00 Does this mean that we would have to claim the difference as taxable income? Also, I completely disagree with the FMV amount. When our realtor listed our house initially, she listed it at $139,900; after a market analysis, we changed the listing to $123,000 (so that we could possibly execute a short sale). We do own a second property that was occupied by a family member, which is where we are living now. This property still has a mortgage, and with the market, we do not have any equity in this property. I believe that we may be insolvent, but I can't be sure. Should I ask the lender for a 1099-C, or would that make any difference? I don't even have a clue where to begin on this, so any help would be appreciated.

[LdiJ]

Originally Posted by TaxHelpPlease

What is the name of your state (only U.S. law)? Indiana

Hello. I am desperate for help regarding a 1099-A form. I've yet to receive all of my tax documents, but I can't figure out what to do with this 1099-A. First off, we did not abandon this property. We were in the process of moving out, and the lender sent some one to lock up the property 5 days prior to the sherrif's sale. This home was our primary residence. We've received a 1099-A stating in box 1 that the balance of the outstanding principal is $125,769.98 and in box 2 that the FMV is $87,500.00 Does this mean that we would have to claim the difference as taxable income? Also, I completely disagree with the FMV amount. When our realtor listed our house initially, she listed it at $139,900; after a market analysis, we changed the listing to $123,000 (so that we could possibly execute a short sale). We do own a second property that was occupied by a family member, which is where we are living now. This property still has a mortgage, and with the market, we do not have any equity in this property. I believe that we may be insolvent, but I can't be sure. Should I ask the lender for a 1099-C, or would that make any difference? I don't even have a clue where to begin on this, so any help would be appreciated.

Since the home was your primary residence, in the end, you are probably not going to have any tax consequences. However, its quite complicated to handle a 1099A properly, and I strongly recommend that you use a tax professional this year. Online software, in particular, is unlikely to be much help in handling it correctly.