Form 1099-A: Acquisition or Abandonment of Secured Property (2015)

What Form 1099-A Is For

Form 1099-A (Acquisition or Abandonment of Secured Property) is an informational tax form that lenders send to borrowers when one of two things happens: either the lender takes possession of property that secured a loan (like through foreclosure), or the lender discovers that you've abandoned the property.

Think of it this way: when you borrowed money to buy property, you promised the lender they could take that property if you couldn't repay the loan. Form 1099-A documents when that actually happens. The form isn't just for houses—it applies to any property that secured a debt, including vehicles, equipment used in business, or investment property. IRS

The lender must send you this form because losing secured property has tax consequences for you. You may have a taxable gain or deductible loss, depending on the situation. The form reports two critical numbers: the outstanding loan balance (principal only, not interest or fees) and the fair market value of the property when it was acquired or abandoned. These numbers help you calculate whether you made money or lost money on the property for tax purposes. IRS

Importantly, receiving a Form 1099-A doesn't automatically mean you owe taxes. It simply means you need to report the transaction and calculate the tax impact. In some cases, you might actually have a loss, which could reduce your taxes (though personal-use property losses generally aren't deductible).

When You’d Use Form 1099-A (Late/Amended Returns)

For the 2015 tax year, you would have received Form 1099-A by January 31, 2016, if your lender acquired or knew about the abandonment of your secured property during 2015. You should have included this information on your 2015 tax return, which was originally due on April 18, 2016 (or October 17, 2016, if you filed for an extension).

Filing a Late Return

If you never filed your 2015 return and just received or found a Form 1099-A from that year, you should file the return as soon as possible. The IRS doesn't have a deadline for late returns—you can file years after the due date. However, you might face penalties and interest if you owed taxes. Include the Form 1099-A information when calculating your gain or loss on the property disposition. IRS

Filing an Amended Return

If you already filed your 2015 return but forgot to include Form 1099-A information, you'll need to file Form 1040-X (Amended U.S. Individual Income Tax Return). You generally have three years from the original due date or two years from when you paid the tax (whichever is later) to file an amended return and claim a refund. For 2015, this would typically mean amending by April 2019 to claim a refund, though you can amend at any time if you owe additional taxes.

Incorrect Information

If you receive a Form 1099-A with wrong information, contact your lender immediately to request a corrected form. Don't file your tax return using incorrect figures. The lender should issue a corrected 1099-A with the "CORRECTED" box checked. IRS

Key Rules or Details for 2015

Who Receives the Form

Lenders must issue Form 1099-A to any borrower when they acquire an interest in secured property or have "reason to know" the property was abandoned. This includes banks, credit unions, finance companies, and even governmental agencies. The lender doesn't have to be in the business of lending money—even one-time lenders conducting business transactions must comply. IRS

Personal vs. Business Property

For personal-use tangible property (like your personal car), no Form 1099-A is required. However, if the property was used wholly or partially for business or investment purposes, the lender must file the form. Real estate always requires reporting, whether it's your home, a rental property, or business property.

Recourse vs. Nonrecourse Debt

Box 5 of Form 1099-A indicates whether you were personally liable for the debt. This distinction is crucial for calculating your tax liability.

Recourse debt: Your “amount realized” is the property's fair market value.
Nonrecourse debt: Your amount realized is the entire debt amount, regardless of the property's value. IRS

Coordination with Form 1099-C

If your lender both acquired/knew about abandonment and canceled remaining debt in the same year, they might send only Form 1099-C (Cancellation of Debt) instead of both forms. Form 1099-C has boxes specifically for reporting the Form 1099-A information (boxes 4, 5, and 7). This prevents duplicate reporting of the same transaction.

No Minimum Dollar Amount

Unlike Form 1099-C, which requires $600 minimum canceled debt, Form 1099-A has no minimum threshold. Any acquisition or abandonment must be reported, regardless of the amounts involved. IRS

Step-by-Step (High Level)

When you receive Form 1099-A, here's how to handle it for your 2015 taxes:

Step 1: Verify the Information

Check that all details are correct: your name, Social Security number, the property description, the date of acquisition/abandonment, the outstanding balance, fair market value, and whether you were personally liable. If anything is wrong, contact the lender immediately for a corrected form.

Step 2: Determine Your Adjusted Basis

Your basis is typically what you paid for the property, plus improvements, minus any depreciation you claimed. For your home, this includes the purchase price plus closing costs and capital improvements.

Step 3: Calculate Amount Realized

This depends on whether you had recourse or nonrecourse debt (check Box 5).

For recourse debt, use the fair market value from Box 4.
For nonrecourse debt, use the outstanding balance from Box 2, plus any cash or property value you received. IRS

Step 4: Calculate Gain or Loss

Subtract your adjusted basis from your amount realized. If the result is positive, you have a gain. If negative, you have a loss. Losses on personal-use property (like your main home) aren't deductible, but gains might be excludable under home sale exclusion rules.

Step 5: Report on the Correct Form

Personal property: Schedule D (Form 1040) and Form 8949
Business property: Form 4797
Main home: Potential exclusion up to $250,000 ($500,000 married filing jointly) if you meet ownership and use tests. IRS

Step 6: Check for Canceled Debt

If the debt exceeded the fair market value and you had recourse debt, the lender might also send Form 1099-C for canceled debt. If you only received Form 1099-A, you might still have canceled debt—consult a tax professional.

Common Mistakes and How to Avoid Them

Mistake #1: Ignoring the Form Entirely

Some taxpayers think they don't need to report foreclosure or abandonment because they lost money and didn't receive cash. Wrong! Always report Form 1099-A information.

Mistake #2: Confusing Recourse and Nonrecourse Debt

This misunderstanding leads to incorrect gain/loss calculations. Check Box 5 carefully. IRS

Mistake #3: Forgetting About Canceled Debt

If you had recourse debt and the balance exceeded fair market value, watch for Form 1099-C and report it as income. IRS

Mistake #4: Using the Wrong Basis

Taxpayers often use the original purchase price without adjusting for improvements or depreciation. Always reconstruct your basis accurately.

Mistake #5: Throwing Away the Form

Keep all Forms 1099-A and related documentation for at least four years after filing.

Mistake #6: Not Claiming Applicable Exclusions

For 2015, the Mortgage Forgiveness Debt Relief Act allowed exclusion of canceled debt on principal residences (up to $2 million). Use Form 982 if eligible. IRS

What Happens After You File

Normal Processing

The IRS processes your return normally and matches the Form 1099-A information against lender reports.

IRS Matching Program

If you fail to report a Form 1099-A, you might receive a CP2000 notice proposing additional tax and penalties. IRS

Potential Audit

Foreclosures and abandonments can trigger audits—keep proof of basis, fair market value, and business use.

Refund Delays

Large exclusions or losses might cause longer processing times.

State Tax Implications

Some states tax canceled debt differently—check conformity to the Mortgage Forgiveness Debt Relief Act.

Future Tax Years

If you later recover value or receive payments from the lender, report income in that later year.

FAQs

Q1: I received Form 1099-A but never formally abandoned my property. Do I still need to report it?

Yes. If your lender sent you the form, they determined they had “reason to know” the property was abandoned. IRS

Q2: Can I deduct the loss on my foreclosed home?

Generally, no. Losses on personal-use property aren't deductible. Business or rental property losses may be. IRS

Q3: I received both Form 1099-A and Form 1099-C for the same property. Do I report both?

Yes. 1099-A covers disposition; 1099-C covers canceled debt. Report both appropriately. IRS

Q4: What if the fair market value on Form 1099-A seems wrong?

You can use a different value if you have an appraisal and explanation attached to your return. IRS

Q5: I filed bankruptcy before the foreclosure. Do I still have to report Form 1099-A?

Yes, but you may exclude canceled debt if discharged in bankruptcy using Form 982. IRS

Q6: My vacation home was foreclosed. How is this different from my main home?

Vacation homes don’t qualify for the $250K/$500K exclusion. Gains are taxable, losses non-deductible. IRS

Q7: I was an authorized user on my ex-spouse's mortgage, but not on the title. Will I receive Form 1099-A?

Generally, no. The form goes to the borrower(s) legally liable on the note. IRS

Sources: 2015 Instructions for Forms 1099-A and 1099-C, IRS Topic No. 432, and IRS Publication 4681.

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