Form 1099-S Checklist: 2018 Tax Year
Purpose
Form 1099-S reports gross proceeds from real estate transactions to both transferors and the Internal Revenue Service. This form documents the sale or exchange of U.S. real property interests and supports accurate reporting of capital gains, ordinary income, and depreciation recapture.
For the 2018 tax year, Form 1099-S reporting affects how transferors report transactions on Form 1040, Schedule D, Form 8949, Form 4797, and Schedule E. These requirements apply to sales of rental properties, investment property, trade or business real estate, and particular personal residences.
Filing Steps
1. Verify Reportable Transactions
Confirm the transaction qualifies as reportable under 2018 rules. Reportable transactions include sales or exchanges of U.S. real property interests such as improved or unimproved land, residential and commercial buildings, condominium units, cooperative housing corporation stock, and non-contingent interests in standing timber.
Investment property and rental property transactions may generate capital gains, ordinary income, or depreciation recapture, depending on property use.
2. Confirm Filer Identity
Obtain the filer’s complete federal Employer Identification Number (EIN). Ensure the filer information matches the information on Form 1096 when filing paper forms.
The filer is typically the settlement agent listed on the HUD-1 or Closing Disclosure, the attorney handling the closing, the mortgage lender, or the title or escrow company responsible for disbursing funds.
3. Collect Transferor Identification
Collect the transferor’s complete taxpayer identification number (SSN, ITIN, ATIN, or EIN) from closing documents. Request this information using Form W-9 for U.S. persons or the appropriate Form W-8 for foreign persons.
Recipient copies of Form 1099-S display only the last four digits of the identification number for privacy, but the full number must be reported to the IRS on Copy A.
4. Enter Date of Closing (Box 1)
Enter the exact date of closing as documented at settlement. On a HUD-1 statement, this is the settlement date. If no HUD-1 is used, enter the earlier of the date title transfers or the date economic burdens and benefits of ownership shift to the transferee.
This date determines the tax year for the transferor’s reporting obligation.
5. Calculate Gross Proceeds (Box 2)
Enter total gross proceeds by including all cash received, notes payable to the transferor, notes assumed by the buyer, notes paid off at closing, and liabilities assumed or taken subject to by the transferee.
For contingent payment transactions, report the maximum determinable proceeds. Do not reduce gross proceeds by selling expenses such as commissions, legal fees, or advertising costs. These adjustments are made by the transferor when reporting income on Schedule D, Form 8949, or other applicable schedules.
6. Property Address or Legal Description (Box 3)
Enter the complete street address of the property transferred, including city, state, and ZIP code. If the address does not sufficiently identify the property, include a legal description such as section, lot, and block.
For timber royalties, enter “Timber royalties.” For lump-sum timber payments, enter “Lump-sum timber payment.”
7. Property or Services Checkbox (Box 4)
Check Box 4 if the transferor received or will receive property or services other than cash or notes as part of the consideration. The value of non-cash consideration is not included in Box 2.
This checkbox alerts the transferor to evaluate the full consideration received. For qualifying real property like-kind exchanges, ensure the transferor files Form 8824.
8. Foreign Person Indicator (Box 5)
Check Box 5 if the transferor is a foreign person, including a nonresident alien, a foreign partnership, a foreign estate, or a foreign trust. This designation triggers FIRPTA withholding obligations for the transferee under the Foreign Investment in Real Property Tax Act.
9. Buyer’s Portion of Real Estate Tax (Box 6)
For transactions involving a residence, enter the portion of real estate tax paid in advance that is allocable to the buyer. This amount represents prepaid property taxes corresponding to the buyer’s ownership period.
The transferor may need to reduce deductible real estate taxes or report the amount as income if previously deducted.
10. Furnish Transferor Copy
Provide Copy B to the transferor by February 15, 2019. This deadline applies regardless of any extension obtained for filing Copy A.
Copies B and C may be downloaded from the IRS website, completed electronically, and furnished to recipients.
11. File with the IRS
File Copy A with the IRS by February 28, 2019, for paper filing or April 1, 2019, for electronic filing. Electronic filing must comply with Publication 1220 specifications.
A copy printed from the IRS website cannot be filed because it is not scannable. Use official IRS forms or approved electronic filing methods.
12. Attach Form 1096 Transmittal
When filing on paper, attach Form 1099-S to Form 1096 as the transmittal cover sheet. Ensure all filer and recipient information matches across forms and that copies are legible and unaltered.
2018 Tax Year Considerations
Like-Kind Exchanges
The Tax Cuts and Jobs Act, effective January 1, 2018, eliminated like-kind exchange treatment for personal property. Only real property exchanges qualify for deferral under Section 1031 for tax years 2018 and later.
A transition rule applies if the relinquished property or replacement property was transferred by December 31, 2017. Qualifying real property exchanges still require Form 8824 when Box 4 is checked.
Depreciation Recapture
Unrecaptured Section 1250 gain remains taxable at a maximum rate of 25 percent for noncorporate taxpayers, including owners of pass-through entities. Transferors must report depreciation recapture separately on Form 4797 and Schedule D.
Form Accessibility
The IRS provides fillable PDF versions of Copies B and C online for furnishing statements to transferors and maintaining records. Copy A filing restriction remains in effect due to IRS scanning requirements.
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