Form 1099-A (2014): Acquisition or Abandonment of Property

What Form 1099-A (2014) Is For

Form 1099-A (2014) is an official IRS tax form that lenders or financial institutions must file when they acquire or learn of the abandonment of secured property that served as collateral for a loan. It enables the Internal Revenue Service to monitor taxable income, gain or loss, or canceled debt resulting from a lender’s acquisition or a borrower’s default. The form provides essential details such as the date acquired, fair market value (FMV), and outstanding loan balance, which assist both the borrower and the IRS in determining tax liability and required reporting on the taxpayer’s return. 

Make sure you do not have any unfiled federal income tax returns before submitting details related to foreclosure or property abandonment.

When You’d Use Form 1099-A (2014)

When a foreclosure sale, lender’s acquisition, or abandonment of secured property occurs, Form 1099-A (2014) provides the information necessary for accurate tax reporting.

• Foreclosure or Repossession: The form is used when a lender forecloses on or repossesses real property or business property that secures a loan, resulting in a reportable taxable event.
  
  
• Voluntary Surrender: The form is issued when a borrower voluntarily returns real property, business property, or other secured assets to the lender, thereby transferring ownership and ending the borrower’s possession.
  
  
• Abandoned Property: The form is filed when a borrower abandons secured property without notice, and the lender determines that the borrower no longer intends to retain ownership or responsibility for the debt.
  
  
• Same Calendar Year Debt Cancellation: The form is required when the lender both cancels the remaining debt and acquires the property within the same calendar year; in this case, Form 1099-C may also be filed.
  
  
• Amended or Late Reporting: The form is filed when previously reported information must be corrected or updated, such as an inaccurate outstanding loan balance, account number, or borrower identification detail.

Learn what happens next and how to respond to IRS notices with our IRS collection process guide.

Key Rules or Details for 2014

• Reporting Obligation: Lenders were required to file Form 1099-A when they acquired property securing a recourse loan or when they became aware that the borrower had abandoned the property.
  
  
• Property Exclusions: Tangible personal property used solely for personal purposes, or property located outside the United States, generally did not require reporting unless it was business property or investment property.
  
  
• Abandonment Determination: The lender determines abandonment when the borrower, who is personally liable for repayment, demonstrates an intent to relinquish permanent ownership or control of the property.
  
  
• Coordination with Form 1099-C: When a lender cancels outstanding debt and acquires the property within the same calendar year, Form 1099-C can be used to meet both the acquisition and cancellation reporting requirements.
  
  
• Non-Business Loans: Even lenders who did not regularly lend money were required to file Form 1099-A if the loan was connected to a trade or business transaction.

If you qualify, you may be able to reduce or eliminate debt income using IRS Form 982 for debt exclusions.

Step-by-Step (High Level)

The process for reporting Form 1099-A (2014) involves several sequential steps to ensure compliance and accurate tax reporting.

1. Lender Forecloses or Identifies Abandonment: The process begins when a lender forecloses on, repossesses, or identifies the abandonment of property securing an unpaid principal balance.
   
   
2. Lender Files Form 1099-A: The lender files Form 1099-A with the IRS, reporting details such as the fair market value FMV, the outstanding debt, and whether the borrower was personally liable for repayment.
   
   
3. Borrower Receives Copy: The borrower receives a copy of Form 1099-A and must use the information provided, including the loan balance and the property’s fair market value, to prepare their tax return for that calendar year.
   
   
4. Calculate Gain or Loss: The borrower calculates gain or loss using the property’s adjusted basis, original purchase price, and sales price or fair market value to determine any taxable gain or deductible loss.
   
   
5. Report on Tax Return: The borrower reports the transaction on the appropriate tax form, such as Schedule D for capital gains or losses or Form 4797 for business or investment property.
   
   
6. IRS Review and Matching: The Internal Revenue Service compares the borrower’s reported information with the lender’s submission to verify accuracy and identify any discrepancies or unreported income.

Common Mistakes and How to Avoid Them

Taxpayers frequently make reporting errors on Form 1099-A (2014), but understanding these issues helps prevent compliance problems and future IRS adjustments.

• Ignoring the Form: Always report information from Form 1099-A on your tax return, even if you believe no tax is due, to avoid penalties or underreporting notices from the Internal Revenue Service.
  
  
• Confusing Loan Balance and Fair Market Value: Review Box 2 for the loan balance and Box 4 for the property’s fair market value to ensure accurate calculations of gain or loss for tax purposes.
  
  
• Misidentifying Personal Liability Status: Verify whether you were personally liable for repayment before reporting, since recourse and nonrecourse loans create different tax outcomes for canceled debt.
  
  
• Overlooking Adjusted Basis: Reconstruct your property’s adjusted basis using the original purchase price, improvements, and depreciation to determine the correct taxable gain or loss.
  
  
• Classifying Property Incorrectly: Confirm whether the property is business property, investment property, or personal property so that capital gains or losses are reported on the proper form.

For business or investment property, you can obtain your business tax transcript to confirm property details and ensure accurate reporting.

What Happens After You File Form 1099-A Information

After a borrower files their tax return using information from Form 1099-A (2014), the Internal Revenue Service compares the taxpayer’s reporting with the lender’s submission to ensure accuracy. If discrepancies exist—such as mismatched fair market value, loan balance, or adjusted basis—the IRS may issue a CP2000 notice to request clarification. Borrowers must also ensure that canceled debt is not reported twice if a Form 1099-C was also filed in the same calendar year. 

Unsure how to report your foreclosure or debt income? Start your case review and get answers from a tax expert.

FAQs

Does Form 1099-A (2014) always result in taxable income?

Not necessarily; if the property was your primary residence, you may qualify for the home sale exclusion or the qualified principal residence indebtedness exclusion, which can reduce or eliminate taxable income related to the transaction.

What if I did not receive Form 1099-A from my lender?

You should contact your lender immediately to request a copy of your loan documents. If the lender cannot provide one, use your foreclosure sale records, loan documents, and debt cancellation notices to report the transaction accurately on your tax return.

How do I report a business or investment property listed on Form 1099-A (2014)?

Report the gain or loss from business property or investment property on Form 4797 or Schedule D, ensuring that the adjusted basis, sales price, and fair market value are calculated correctly for tax purposes.

Can I receive both Form 1099-A and Form 1099-C in the same calendar year?

Yes, if a lender cancels the outstanding debt and acquires the property in the same calendar year, you may receive both forms. Coordinate the information to avoid double-reporting the debt income or gain.