Form 1099-A: Acquisition or Abandonment of Secured Property (2022)
A Complete Guide for Borrowers
When you lose property to foreclosure or walk away from a loan, taxes might be the last thing on your mind—but the IRS wants to know about it. Form 1099-A is how lenders report these situations, and understanding this form can save you from unexpected tax bills or filing mistakes. This guide breaks down everything you need to know in plain English.
What the Form Is For
Form 1099-A is an information return that lenders must file when they take back property that secured a loan, or when they discover that you've abandoned such property. Think of it as the IRS's way of tracking what happens when loans go bad.
Here's the basic scenario: You borrowed money to buy something—a house, a car, business equipment—and that property served as collateral for the loan. If the lender forecloses and takes the property back, or if you simply walk away and abandon it, the lender sends Form 1099-A to both you and the IRS. The form shows critical information like how much you still owed when this happened, what the property was worth, and whether you were personally responsible for repaying the debt.
The lender doesn't need to be in the business of lending money to file this form—even a private individual who lent you money with property as security must file if they take or discover abandonment of that property. However, there's an important exception: if the property was something like a car used purely for personal reasons (not business or investment), no form is required. IRS Form 1099-A Instructions
Why does this matter to you? Because receiving a 1099-A doesn't just document what happened—it can trigger tax consequences. You might owe taxes on a gain from the "sale" of the property, or you might have taxable income if the lender forgives part of your debt. The form gives you the numbers you'll need to figure out your tax situation.
When You’d Use It (Filing Late or Amended Returns)
Normal Timing
Lenders must file Form 1099-A by February 28 (or March 31 if filing electronically) for events that happened in the previous calendar year. You should receive your copy by January 31. For a 2022 foreclosure or abandonment, you would have received the form by January 31, 2023, to report on your 2022 tax return.
What If You Never Received a 1099-A?
If you lost property to foreclosure or abandonment in 2022 but never received the form by mid-February 2023, you should have contacted your lender first. If that didn't work, calling the IRS at 1-800-829-1040 would have been your next step. Importantly, you still must report the transaction on your tax return even without the form—you just need to gather the information yourself from loan documents and appraisals. IRS Topic 432
Corrected Forms
Sometimes lenders make mistakes—wrong dollar amounts, incorrect checkboxes, or other errors. If you receive a corrected 1099-A after you've already filed your tax return, you'll need to file an amended return (Form 1040-X) if the correction changes your tax liability. Contact the lender immediately if you spot an error on your form.
Late Filing by Lenders
If a lender filed Form 1099-A late for a 2022 transaction, they might face IRS penalties—but that's their problem, not yours. Your responsibility is to report the transaction correctly on your 2022 return, even if you received the form late. The IRS has ways to match up late forms with the correct tax year.
Key Rules or Details for 2022
Several important rules governed Form 1099-A reporting for the 2022 tax year:
Filing thresholds: Unlike some other 1099 forms that only apply above certain dollar amounts, Form 1099-A must be filed for any acquisition or abandonment of secured property, regardless of the loan balance or property value—with the exception of personal-use tangible personal property mentioned earlier.
E-filing requirements: For 2022, if a lender had 250 or more information returns to file (counting all types of 1099s combined), they were required to file electronically. This threshold dropped to just 10 returns starting with tax year 2023, but for 2022, the 250-return rule still applied.
Coordination with Form 1099-C: Here's an important money-saver to understand: If a lender both takes back your property and cancels part of your debt in the same calendar year (2022), they have the option to file only Form 1099-C (Cancellation of Debt) instead of filing both forms. Form 1099-C includes boxes that capture the 1099-A information. If you received only a 1099-C for a foreclosure, that's probably why—but make sure it has boxes 4, 5, and 7 completed. IRS Instructions for Forms 1099-A and 1099-C
What must be reported: The form includes seven boxes of information. Box 1 shows the date the lender acquired the property or first knew it was abandoned. Box 2 shows the principal balance you owed (not including interest or fees). Box 4 shows the property's fair market value on that date. Box 5 (a critical checkbox) indicates whether you were personally liable to repay the debt. Boxes 6 and 7 provide a description and address of the property.
Personal liability matters: That checkbox in Box 5 is crucial for your taxes. If checked, you had "recourse" debt—you were personally on the hook. If unchecked, it was "nonrecourse" debt—the lender could only take the property, not come after your other assets. This distinction dramatically affects how you calculate any taxable gain or cancellation of debt income.
Property location exception: No form is required if the secured property is located outside the United States and you provided the lender a sworn statement that you're an exempt foreign person (unless the lender knows that's false).
Step-by-Step (High Level)
Step 1: Verify the Information
Check every box against your records. Confirm the date, outstanding balance, property description, and especially that Box 5 checkbox about personal liability. Contact the lender immediately if anything looks wrong.
Step 2: Understand What Tax Forms You’ll Need
Form 1099-A typically triggers reporting on your return in two ways: (1) reporting the gain or loss on the property disposition, and (2) potentially reporting cancellation of debt income if the lender forgave part of what you owed.
Step 3: Calculate Your Gain or Loss on the Property
This goes on Schedule D and Form 8949 for personal property like a home, or Form 4797 for business property. Your "amount realized" depends on Box 5. If personally liable (Box 5 checked), your amount realized is the fair market value shown in Box 4. If not personally liable (Box 5 unchecked), your amount realized is the full debt amount from Box 2. Subtract your adjusted basis (usually what you originally paid, minus depreciation if business property, plus improvements) to find your gain or loss.
Step 4: Determine If You Have Cancellation of Debt Income
If Box 5 is checked and the debt balance (Box 2) exceeds the fair market value (Box 4), the lender may have forgiven the difference. You'll typically receive a separate Form 1099-C if this debt was canceled, showing the forgiven amount. This could be taxable income—but important exclusions exist, especially the insolvency exclusion and the qualified principal residence indebtedness exclusion (which was available through 2025 for main homes). IRS Publication 4681
Step 5: Consider Exclusions and Exceptions
Review IRS Publication 4681 carefully. You might not owe taxes on canceled debt if you were insolvent (liabilities exceeded assets) immediately before the cancellation, if the cancellation happened in bankruptcy, or if it involved your main home under specific circumstances.
Step 6: Complete the Necessary Tax Forms
Report the property transaction on the appropriate schedule, and report any taxable cancellation of debt income on Schedule 1 (Form 1040), line 8c. If you're excluding canceled debt from income, you'll also need to file Form 982 and possibly reduce certain tax attributes (like net operating losses or basis in property).
Step 7: Keep Detailed Records
Maintain Form 1099-A, all correspondence with the lender, property records, proof of fair market value, and documentation of insolvency or other exclusions for at least three years after you file your return (longer is better).
Common Mistakes and How to Avoid Them
Mistake #1: Ignoring the Form Entirely
Some people think, "I lost money on this house, so I don't owe taxes." Wrong. Even if you have a loss on the property itself, you might have taxable income from canceled debt. You must at minimum report the property disposition, and losses on personal-use property aren't deductible—though losses on investment or business property may be.
Solution: Always report transactions for which you receive a 1099-A, even if you believe no tax is due. Show the IRS you're compliant.
Mistake #2: Confusing the Amount Realized with the Amount Owed
Your amount realized for calculating gain or loss is not necessarily the same as what you owed on the loan. Reread the Box 5 rules carefully. This single mistake causes massive errors in gain/loss calculations.
Solution: Use Box 4 (FMV) as your amount realized if Box 5 is checked. Use Box 2 (full debt) as your amount realized if Box 5 is unchecked.
Mistake #3: Double-Counting Income
If you receive both Form 1099-A and Form 1099-C for the same property in the same year, you might accidentally report both the gain from the property disposition and the full amount from the 1099-C. The numbers overlap.
Solution: Read both forms together. The 1099-C amount may include some or all of the same financial event reported on the 1099-A. Calculate the property gain/loss first, then determine if there's additional debt forgiveness beyond the property's value.
Mistake #4: Missing Out on the Insolvency Exclusion
Many people who lost property in foreclosure were underwater financially—their debts exceeded their assets. If you were insolvent immediately before the debt cancellation, you can exclude canceled debt from income up to the amount of insolvency. Thousands of taxpayers miss this break simply because they don't know about it.
Solution: Complete the Insolvency Worksheet in IRS Publication 4681. List all your assets and liabilities as of the day before the debt was canceled. If liabilities exceed assets, you may exclude some or all the canceled debt.
Mistake #5: Assuming Incorrect Information Is the Lender’s Problem
While lenders can make mistakes, it's your tax return and your responsibility. The IRS will come to you with questions, not the lender.
Solution: Verify every number on Form 1099-A against your own records. If something's wrong, contact the lender for a corrected form before filing your return. If you can't get a correction, attach a statement to your return explaining the discrepancy and use the correct numbers.
Mistake #6: Forgetting to File Form 982
If you're claiming an exclusion for canceled debt (insolvency, bankruptcy, qualified principal residence, etc.), you must file Form 982 with your return. Without it, the IRS will assess tax on the full canceled debt amount shown on Form 1099-C.
Solution: Form 982 isn't optional if you're excluding canceled debt. File it along with your Form 1040, and keep documentation supporting your exclusion claim.
What Happens After You File
IRS Matching Program
The IRS receives a copy of every 1099-A filed by lenders. Their computers match these forms against tax returns. If you didn't report a 1099-A transaction, expect a computer-generated notice (typically a CP2000) proposing additional tax, usually 12 to 18 months after you filed. These notices assume the worst-case scenario—that the full amount is taxable—so don't panic. You can respond with an explanation and documentation.
Audit Possibilities
Foreclosures and abandonments sometimes trigger closer IRS scrutiny, especially regarding claims of insolvency exclusions or main home treatment. Keep excellent records of property basis, fair market value determinations, and all calculations. If you claimed an insolvency exclusion, be prepared to document your asset and liability values.
State Tax Implications
Most states follow federal treatment of foreclosures and canceled debt, but not all. Some states don't recognize certain federal exclusions. Check your state's rules or consult a tax professional familiar with your state's laws.
Future Tax Impact
If you excluded canceled debt from income, you may have to reduce certain "tax attributes" like net operating losses, general business credits, or the basis of your property. These reductions could affect future tax years. Form 982 walks you through these calculations. The most common impact is a reduction in property basis, which could increase your gain when you sell that property later.
Credit Report Considerations
While this is outside tax law, remember that foreclosures and debt cancellations affect your credit score and remain on your credit report for seven years. The 1099-A is just the tax side of the story.
Amended Returns
If you later discover an error in how you reported a 1099-A transaction, you generally have three years from when you filed your original return (or two years from when you paid the tax, whichever is later) to file an amended return claiming a refund.
FAQs
Q1: I received a 1099-A, but I never actually abandoned my property—the bank foreclosed. Why did I get this form?
Form 1099-A covers both acquisitions (like foreclosures and repossessions) and abandonments. The "A" stands for "Acquisition or Abandonment." When the bank foreclosed, they "acquired" the property from you, which triggers the filing requirement. Box 1 should show the foreclosure date, not an abandonment date. The form's name is just broader than your specific situation.
Q2: My 1099-A shows a fair market value much lower than what I thought my property was worth. What should I do?
Lenders typically use the foreclosure sale price or a quick appraisal as the fair market value. If you believe it's materially wrong, you can use a different valuation if you have professional documentation (a qualified appraisal conducted near the date of acquisition/abandonment). Attach an explanation to your tax return and keep the appraisal for your records. Be aware that the IRS might question your valuation, so make sure your evidence is solid.
Q3: Box 5 on my 1099-A isn't checked, but I know I signed a promissory note promising to repay the loan. Why isn't it checked?
Some states have laws that make certain loans effectively nonrecourse, even if you signed a note. For example, some states prohibit deficiency judgments on first mortgages for primary residences. The lender bases Box 5 on whether they could legally come after you for any unpaid balance under applicable law. If you think it's wrong, consult with an attorney familiar with your state's laws.
Q4: I received both a 1099-A and a 1099-C for the same property in 2022. Do I report both?
Yes and no. You report the information from both forms, but not as separate transactions. Calculate your gain or loss on the property using the 1099-A information. Then use the 1099-C to report any cancellation of debt income (the amount the lender forgave beyond the property's value). Together, they tell the complete story of one transaction. Publication 4681 has examples showing exactly how to coordinate the two forms.
Q5: Is canceled debt shown on Form 1099-A always taxable income?
Not necessarily. Form 1099-A itself doesn't show canceled debt—that appears on Form 1099-C. But whether canceled debt is taxable depends on several exclusions: bankruptcy, insolvency, qualified principal residence indebtedness, and others. Many borrowers qualify for at least partial exclusion. Review Publication 4681 carefully to determine which exclusions might apply to you.
Q6: I abandoned my rental property in 2022, but the bank didn't foreclose until 2023. Which year do I report this?
Generally, you report the transaction in the year shown in Box 1 of Form 1099-A—the year the lender acquired the property or knew of the abandonment. If the lender filed the 1099-A for 2023 (showing a 2023 date in Box 1), you report it on your 2023 return. However, if you formally abandoned the property in 2022 and the lender can prove they knew about it then, they should have filed for 2022. This gets complicated, so consult a tax professional if there's ambiguity about which year applies.
Q7: Will I always owe taxes if I receive Form 1099-A?
No. Many people report 1099-A transactions and owe no additional tax. You might have a loss on the property (though losses on personal-use property aren't deductible). Even if there's canceled debt, you might qualify for an exclusion. The form is informational—it doesn't automatically mean you owe taxes, but it does mean you must report the transaction and do the calculations.
Final Thoughts
Form 1099-A marks a difficult financial moment, but understanding the tax implications helps you avoid making a bad situation worse. The key takeaways: always report the transaction, verify the numbers carefully, check whether you qualify for debt exclusions, and don't hesitate to consult IRS Publication 4681 or a tax professional if the situation is complex.
The rules can feel overwhelming, but remember that the IRS provides multiple exclusions specifically because they recognize that foreclosures and abandonments often happen during financial hardship. Take the time to understand your options—particularly the insolvency exclusion and qualified principal residence indebtedness exclusion—and you may discover your tax bill is much smaller than you feared, or even nonexistent.
