Purpose (2013-Specific)
Form 1099-S, issued by the Internal Revenue Service, reports gross proceeds from real estate transactions involving the sale or exchange of real property. In 2013, filers must distinguish between cash or notes reported in Box 2 and non-cash consideration identified by checking Box 4. This information return is essential for transferors who must report capital gain or loss on Schedule D and Form 8949, or report business property sales on Form 4797.
IRS Form 1099-S captures critical transaction details, including proceeds from real estate transactions, property descriptions, and real estate tax allocations that affect the transferor’s tax liability and capital gains calculations.
Filing Steps
1. Obtain Transferor Information
Collect the transferor’s correct name, street address, city, state, ZIP code, country (if foreign person), and taxpayer identification number (Social Security Number for individuals or Employer Identification Number for entities). Use Form W-9 to request the tax identification number and certification. Verify all information against transaction documents before entering data on the information return.
2. Enter Filer Information
Record the filer’s complete name, street address, city, state, ZIP code, country (if applicable), and federal identification number in the header section. The filer may be the settlement agent listed on the Closing Disclosure or HUD-1 Settlement Statement, the escrow company, the transferor’s attorney, the transferee’s attorney, the title company, or the mortgage lender.
Confirm this information matches the entity responsible for closing the transaction under the Real Estate Settlement Procedures Act guidelines.
3. Record Closing Date
Identify and enter the exact date of closing in Box 1 as shown on the Closing Disclosure or HUD-1 Settlement Statement. On a Uniform Settlement Statement, use the settlement date. If no uniform statement is used, the closing date is the earlier of the date title transfers or the date economic burdens and benefits of ownership shift to the transferee.
4. Calculate Gross Proceeds for Box 2
Determine gross proceeds by summing all consideration treated as cash, including cash received or to be received, the stated principal amount of notes payable to or for the benefit of the transferor, and notes or mortgages paid off at settlement. If the transferee assumes a liability of the transferor or takes the property subject to a liability, treat the liability as cash and include it in gross proceeds.
Do not include the fair market value of non-cash property or services. For contingent payment transactions, include the maximum determinable proceeds. Do not reduce gross proceeds by commissions, legal fees, advertising costs, deed preparation expenses, or other selling costs paid by the transferor.
5. Enter Property Description in Box 3
Record the street address or legal description, including city, state, and ZIP code, to identify the real property transferred. Reportable real estate includes improved or unimproved land, air space, permanent structures, condominium units, cooperative housing stock, and non-contingent interests in standing timber.
For timber royalties paid under pay-as-cut contracts, enter “Timber royalties.” For lump-sum timber payments, enter “Lump-sum timber payment.” Ensure the description clearly identifies the specific property transferred.
6. Determine Box 4 Checkbox Status
Check Box 4 only if the transferor has received or will receive property (excluding cash or cash-equivalent consideration) or services as part of the transaction. Do not assign a monetary value.
If Box 4 is checked and the transferor both transferred property in a like-kind exchange and received like-kind assets, the transferor must file Form 8824 under Section 1031. Not all Box 4 situations require Form 8824; only qualifying like-kind exchanges trigger the filing requirement.
7. Calculate Buyer’s Real Estate Tax Portion in Box 5
Enter the portion of real estate tax paid in advance that is allocable to the buyer at settlement. Use the HUD-1 Settlement Statement or comparable closing form to determine the correct amount.
If the transferor already paid the tax for the period that includes the sale date, subtract the Box 5 amount from the total paid to determine the deductible real estate tax. If the transferor deducted the tax in a prior year, generally report the Box 5 amount as income.
8. Meet Furnishing and Filing Deadlines
Furnish Copy B to the transferor by February 18, 2014. File Copy A with the IRS by February 28, 2014, if filing on paper, or by March 31, 2014, if filing electronically. Electronic submissions must be made through the IRS FIRE system and comply with Publication 1220.
9. Use Account Number Field
Enter a unique identifier in the Account Number field if used for internal tracking. This field is optional but recommended and required when filing multiple Forms 1099-S for the same transferor involving different transactions.
10. Complete All Copies with Identical Information
Prepare Copies A, B, and C with matching information. Verify Box 1 (date of closing), Box 2 (gross proceeds), and Box 3 (property description) against source documents. Inconsistent data may result in IRS processing delays or penalties.
11. File Copy A with Form 1096
Submit Copy A to the IRS with Form 1096, Annual Summary and Transmittal of U.S. Information Returns. Ensure Form 1096 totals match the aggregate amounts reported on all attached Forms 1099-S. File each group of information returns with a separate Form 1096.
12. Retain Copy C for Filer’s Records
Retain Copy C and supporting documentation for at least three years from the due date of the return or ensure the ability to reconstruct the data if requested by the IRS.
2013 Year-Specific Updates
Deadlines and Due Dates
For 2013 reporting, Copy B was due to transferors by February 18, 2014. Paper filings were due to the IRS by February 28, 2014, and electronic filings by March 31, 2014.
Box 4 Checkbox and Section 1031 Exchanges
In 2013, Box 4 was used to identify receipt of non-cash property or services. Form 8824 was required only when the transferor both transferred and received property in a like-kind exchange during the tax year.
Foreign Person Considerations
Transactions involving foreign persons or nonresident aliens are reportable on Form 1099-S. The transferee may be required to withhold tax under FIRPTA rules. Refer to Publication 515 for withholding requirements.
Federal Mortgage Subsidy Recapture
Form 8828 applied to certain subsidized mortgages originated after 1990 if the sale occurred within nine years of receiving the subsidy and income thresholds were met. This requirement remained in effect for 2013.
Paper Form Requirements
Paper Forms 1099-S filed for 2013 had to be scannable. Forms printed from the IRS website were often not acceptable. Filers were required to use official IRS forms or approved substitutes meeting Publication 1179 specifications.
Account Number Field Guidance
The Account Number field remained optional in 2013 but was recommended for filers handling multiple transactions for the same transferor to improve internal tracking and identification.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
