If you’ve received IRS Form 1099-A — Acquisition or Abandonment of Secured Property — it’s important to understand what each box means. This form provides essential information related to foreclosures, repossessions, or the abandonment of property. Each box plays a specific role in determining whether you need to report a gain or loss on your tax return, or whether the event triggers any additional tax responsibilities.
Here’s a breakdown of what’s reported in each box of Form 1099-A and how to use that information.
Form 1099-A-Box Information – Breakdown
Box 1: Date of Acquisition or Abandonment
This is the date the lender acquired the property or the borrower abandoned it. This date is considered the “sale” or “transfer” date for tax purposes and is used to calculate capital gain or loss.
Box 2: Balance of Principal Outstanding
This box shows the remaining loan principal (not including interest or fees) at the time of the acquisition or abandonment. It’s important for understanding how much debt was secured by the property.
Box 3: Reserved
Box 3 is currently left blank and not used for reporting. You can skip this box when reviewing the form.
Box 4: Fair Market Value (FMV) of Property
This represents the property’s estimated value at the time it was acquired by the lender or abandoned by the borrower. It helps determine the “sale price” of the property for capital gains calculations.
Box 5: Was Borrower Personally Liable for Repayment of the Debt?
This checkbox indicates whether you (the borrower) were personally responsible for the debt. If checked “Yes,” you may be personally liable for any deficiency balance and may also receive Form 1099-C if part of the debt was later forgiven.
Box 6: Description of Property
This includes a brief description of the property—typically an address or general type (e.g., residential home, vehicle, or business asset). It helps identify the property involved in the transaction.
Conclusion
Each box on Form 1099-A provides crucial details for understanding the tax impact of a foreclosure or property abandonment. Accurately interpreting this information helps you correctly report any gains or losses and anticipate whether additional tax forms, like Form 1099-C, may follow.
If you are unsure, reach out to us today. Dimov Tax proudly presents professional assistance with Form 1099-A and Form 1099-C.