Form 1099-A and 1099-C Checklist for 2013 Filings

Mortgage Forgiveness Debt Relief Act Eligibility

The Mortgage Forgiveness Debt Relief Act remained in effect through 2013 for qualified principal residence indebtedness. Taxpayers may exclude up to $2 million of canceled qualified principal residence indebtedness from gross income when filing their tax return.

Documentation of the property address verifies that the taxpayer owned and lived in the home as a principal residence. Supporting records proving principal residence status must remain available, as the IRS may request verification of the exemption claim during tax season.

Completing Key Boxes on Form 1099-C (2013)

• Box 1 shows the date of the identifiable event or the date of actual discharge if you
• Box 2 reports the amount of discharged debt, including stated principal for lending
• Box 3 shows interest if you included it in the canceled debt reported in Box 2, though
• Box 4 requires a description of the debt origin, such as student loan, mortgage, or credit

1. Step 1: Complete Box Information on Form 1099-C

   choose to report before an identifiable event occurs. transactions, but excluding amounts received through settlement agreements or foreclosure sales. reporting the interest separately remains optional under the 2013 instructions. card expenditure, to help the recipient report canceled amounts in the proper income category.

• Box 5 includes a checkbox indicating whether the debtor was personally liable for
• Box 6 requires an identifiable event code using letters A through I, with code “A”
• Box 7 reports the fair market value of property for combined Form 1099-C and 1099-A
• Net operating losses carried forward to future tax years may be reduced as part of the
• Tax credits that would otherwise be available to offset future tax liability may be limited or
• Capital loss carryforwards that would normally reduce capital gains in later years may be
• The tax basis in property owned by the taxpayer at the time of discharge may be
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• Tax relief options if you owe the IRS

2. Step 2: Identify Debtor Liability and Event Codes

   repayment of the debt when it was created or at the time of last modification. designating bankruptcy discharge under Title 11 of the U.S. Code. filings. Generally, the gross foreclosure bid price represents the fair market value for foreclosure or execution sales, while appraised value applies to abandonment or voluntary conveyance.

   Reporting Property Acquisition Through Foreclosure

   When property is acquired through foreclosure or abandonment, and you file Form 1099-A separately, complete the property description box with a description of the property. Include the address for real property or the section, lot, and block if the address does not sufficiently identify the property.

   For personal property, enter the applicable type, make, and model to provide adequate identification. Box 4 on Form 1099-A reports the fair market value of property on the acquisition date, which affects whether cancellation of debt income is recognized.

   Combined Form 1099-C and 1099-A Filing

   Combined filings require a property description in Box 4 of Form 1099-C and fair market value reporting in Box 7. This figure directly affects whether cancellation of debt income is recognized or whether the acquisition of property rules apply instead.

   For abandonment or voluntary conveyance to the lender instead of foreclosure, enter the appraised value of the property. The 2013 instructions specify that you may file Form 1099-C only to meet both Form 1099-A and Form 1099-C filing requirements for the same debtor.

   Applying Exclusions for Bankruptcy and Insolvency

   Bankruptcy discharge under Title 11 requires accurate reporting in Box 6 using the identifiable event code “A” to allow IRS coordination with bankruptcy court records. These amounts qualify for exclusion from taxable income under IRC Section 108(a)(1)(A), and the taxpayer receives notification that a reduction of tax attributes is required.

   Attribute reduction may affect the following: required tax attribute reduction following a bankruptcy discharge. reduced due to mandatory attribute reduction under IRC Section 108. adjusted downward as a result of the discharge of indebtedness exclusion. reduced, affecting depreciation calculations or gain or loss recognition in future transactions.

   Insolvency at the time of discharge allows taxpayers to exclude canceled debt from gross income under IRC Section 108(a)(1)(B). Document the extent of insolvency by calculating total liabilities against total assets at the discharge date.

   The IRS provides no simplified worksheets for insolvency calculations under the 2013 instructions. Taxpayers must maintain detailed records of their financial position at the discharge

   date and clearly separate insolvent cancellations from non-insolvent amounts when multiple debts are involved.

   Filing Deadlines and Amendment Procedures

   Paper filing of all Forms 1099-C with the IRS must occur by February 28, 2014. Electronic filing extends the deadline to March 31, 2014, providing additional time for creditors who file electronically.

   Furnish copies to recipients by January 31, 2014, regardless of filing method. The 2013 instructions emphasize that late filing without reasonable cause results in penalties that the IRS adjusts annually based on inflation and tax law changes.

   Errors discovered after filing require preparation of a corrected Form 1099-C by marking the

   “CORRECTED” checkbox at the top of the form. This checkbox appears above the creditor information section, not within any numbered box on the form.

   According to the 2013 instructions, returns must be corrected as soon as possible after the error is identified. Include the original form information and corrected data to allow accurate reconciliation by the IRS and the recipient of the cancellation of debt income reported.

   Multiple Debts and Creditor Responsibilities

   File separate Forms 1099-C for each debt if a single taxpayer has multiple canceled debts from one creditor. For 2013, do not combine separate debts on one form unless the separate cancellations are under a plan to evade Form 1099-C requirements.

   Each form must clearly identify the debt type, amount in Box 2, and applicable exclusion information. Recipients need this information to correctly report each transaction as miscellaneous income or apply proper exclusions when filing their tax return.

   Complete all name, address, and taxpayer identification number fields accurately for both issuer and recipient. The IRS matches this information against filed tax returns during processing, and any mismatch may delay the recipient’s ability to reconcile the form with reported income.

   If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.