Form 1099-S Checklist: 2023 Tax Year
Purpose
Form 1099-S, Proceeds from Real Estate Transactions, is used by the Internal Revenue Service to report gross proceeds from real estate transactions. This information returns documents the sale or exchange of U.S. real property interests, including improved and unimproved land, residential and industrial buildings, condominium units, and air space.
The form ensures proper reporting of capital gains and other taxable events related to real estate transactions.
Filing Steps
1. Determine Reporting Requirements
Verify that the transaction qualifies for Form 1099-S reporting. Reportable real estate includes sales or exchanges of any present or future ownership interest in:
- Improved or unimproved land, including air space
- Inherently permanent structures, such as residential, commercial, or industrial buildings
- Condominium units with appurtenant fixtures and common elements
- Stock in cooperative housing corporations
- Non-contingent interests in standing timber
2. Identify the Responsible Filer
Generally, the person responsible for closing the transaction must file Form 1099-S. If a Closing Disclosure or settlement statement is used, the settlement agent listed on that document is typically responsible.
If no Closing Disclosure is used, filing responsibility follows a priority order that may include the transferee’s attorney, transferor’s attorney, disbursing title or escrow company, mortgage lender, transferor’s broker, transferee’s broker, or the transferee.
3. Obtain Transferor Identification Information
Request the transferor’s complete taxpayer identification number (SSN, ITIN, ATIN, or EIN) no later than the time of closing. Use Form W-9 for U.S. persons. Foreign persons must provide the appropriate Form W-8.
The transferor must certify that the taxpayer identification number provided is correct.
4. Record the Closing Date (Box 1)
Enter the closing date in Box 1. On a Closing Disclosure, this is the Closing Disclosure date. If no Closing Disclosure is used, the closing date is the earlier of the date title transfers or the date the economic burdens and benefits of ownership shift to the transferee.
5. Calculate Gross Proceeds (Box 2)
Report gross proceeds, which include:
- Cash received or to be received for the real property
- The stated principal amount of notes payable to or for the benefit of the transferor
- Notes or mortgages paid off at settlement
- Any liability assumed by the transferee or taken subject to
Do not reduce gross proceeds by seller expenses such as commissions, legal fees, or advertising costs. For contingent payment transactions, include the maximum determinable proceeds.
6. Enter Property Address or Legal Description (Box 3)
Provide the complete property address, 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.
Use information from the Closing Disclosure or comparable settlement documents to ensure accuracy.
7. Mark Box 4 for Property or Services Consideration
Check Box 4 if the transferor received or will receive property or services other than cash or consideration treated as cash.
Under the post-2017 Tax Cuts and Jobs Act rules, like-kind exchanges under Section 1031 are limited to real property only. If Box 4 is marked and the transferor received like-kind real property, the transferor should file Form 8824.
8. Mark Box 5 for Foreign Persons
Check Box 5 if the transferor is a foreign person, including a nonresident alien, foreign partnership, foreign estate, or foreign trust.
Transactions involving foreign transferors are reportable on Form 1099-S. The transferee may have withholding obligations under FIRPTA. Refer to Publication 515 for withholding guidance. Marking Box 5 does not relieve the transferee of separate withholding responsibilities.
9. Enter Buyer’s Share of Real Estate Tax (Box 6)
For transactions involving a residence, enter the real estate tax paid in advance that is allocable to the buyer. Report only prepaid taxes, not taxes paid in arrears.
Use the Closing Disclosure or comparable settlement statement to determine the correct allocation. This information helps prevent duplicate real estate tax deductions.
10. Furnish Copy B to Transferor
For the 2023 tax year, furnish Copy B to the transferor by February 15, 2024.
Transferors should use Copy B to determine how to report the transaction on their tax return, such as on Schedule D, Form 8949, Schedule E, Form 4797, Form 6252, or Form 8824, depending on property type and transaction details.
11. File Copy A with the IRS
For 2023 returns:
- Paper filing deadline: February 28, 2024
- Electronic filing deadline: April 1, 2024
Electronic filing is mandatory for filers with 10 or more information returns in total, aggregating all information return types. Electronic filing must be completed using Publication 1220-compliant software or the IRS Information Returns Intake System (IRIS).
12. Correct Errors Promptly
If errors are discovered after filing, file a corrected Form 1099-S by marking the CORRECTED checkbox and resubmitting the form with the corrected information. Maintain records documenting the reason for the correction.
13. Maintain Documentation
Retain copies of Closing Disclosures, settlement statements, escrow records, and supporting documentation for at least four years to comply with IRS recordkeeping requirements and support audit inquiries.
Exceptions to Reporting
Form 1099-S reporting is not required for certain transactions, including:
- Sales where the transferor certifies the property was their principal residence and the full gain is excludable under Section 121
- Transfers where the transferor is a corporation or governmental unit
- De minimis transfers for less than $600
- Foreclosures, deeds in lieu of foreclosure, or property abandonments
Note on Transferor Obligations
Transferors receiving Form 1099-S must report the transaction on their tax return using the appropriate forms based on property type and use. The gross proceeds reported on Form 1099-S represent a starting point for gain or loss calculations but do not determine the final tax liability.
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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.
