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1099-A vs. 1099-C

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Mark Cappel
UpdatedOct 4, 2010
Key Takeaways:
  • A lender issues 1099-A when a borrower abandons a property.
  • A financial institution issues a 1099-C when it forgives a debt.
  • Canceled mortgage debt may not be taxable.

What is the difference between a 1099-A and 1099-C, and how will we know when our bank canceled our mortgage debt?

We had a piece of raw land (lot) in TX that was foreclosed on in 2009. We received a 1099A from the bank showing the bank taking a substantial loss (mortgage owed at time of foreclosure compared to FMV at time of foreclosure). We are personally liable for the debt as it is recourse debt. We have not received a 1099C. Our tax accountant is showing that we have no income to report in 2009 as we are still personally liable for the debt. I read on your site that TX has a 2 year statute of limitations on the debt collection. At what point does the debt that exceeded the value of the property become taxable to us? What must the bank send us to show that it is taxable once they relinquish their rights to sue (as long as 2 years from the foreclosure)?

A creditor is required to issue a 1099-A when a borrower abandons real or personal property. According to the IRS 1099-A instructions, "An abandonment occurs when the objective facts and circumstances indicate that the borrower intended to and has permanently discarded the property from use."

A 1099-A is not a notice of forgiveness. It is unclear to me what the purpose of a 1099-A is, other than to alert the IRS that at some point in the future the entity reporting the borrower's abandonment may issue a 1099-C.

A 1099-C is a notice to the IRS that the financial institution has forgiven or canceled a debt of $600 or more. See the IRS Instructions for Forms 1099-A and 1099-C and IRS Form 982 to learn more.

If the financial institution issues a 1099-C to you, then it has forgiven the debt and you must report the amount on the 1099-C as income. Fortunately, the Mortgage Forgiveness Debt Relief Act allows taxpayers to exclude income from the discharge of debt on their principal residence. It includes the cancelation of the complete debt, or if the mortgage terms were renegotiated.

If the financial institution issues a 1099-C to you, it will probably not pursue you for the deficiency balance because it has deducted the loss on the loan from its taxes. However, there is no guarantee the financial institution will not pursue you for the deficiency balance and then later amend its tax returns. However, such a chain of events is unlikely.

I hope this information helps you Find. Learn & Save.



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AAnn Combs, Feb, 2015

I filed bankruptcy, included my house. Loan was with BOA, then they gave to Green Tree. I got a 1099A from Green Tree. I do not think they know about my bankruptcy. What I do??? Box 5 is not checked off on 1099A.

DDaniel Cohen, Feb, 2015

Ann, I recommend that you consult with a tax professional, to get specific instructions on how to handle your 1099A. The potential implications of making an error are large, so you want to be sure to do things properly.

Here are some thoughts I have, but please don't consider them formal advice, as only a tax professional can provide this kind of answer with authority.

In box 5, the lender specifies whether it thinks you have personal liability for taxes related to the foreclosure. You may have no liability for the deficiency balance due to a bankruptcy where your home loan liability was discharged. If you reaffirmed your liability, you would be liable, in my opinion.

This may not apply to you but for someone who lives in a non-recourse state, such as California or Arizona, may have no liability for the deficiency balance because of state law.


PPaDua, Apr, 2012
I had taken out two loans for my home which was foreclosed last year. I received a 1099 a & c from one institution and just a 1099a from the other. How do I go about filing with just one of the 1099c?
BBill, Apr, 2012
Follow the instructions you find in the IRS Form 982, or consult with an experienced tax preparation specialist, or contact the IRS directly.
FFrasier, Apr, 2012
My husband and I sent a certified letter to our bank in May, 2010, informing them that we were forced to abandon the property for health reasons, and enclosed the keys. They waited several months before starting foreclosure and did not complete the process until August, 2011 when they bought back the property for $230,000 less than we paid for it. They resold the property in December, 2011 for $30,000 more than they paid. We finally received a 1099-A that says in Box 1 that they acquired the property in December, 2011 (which is incorrect; they purchased it in August) also ignoring that we abandoned the property via certified letter in 2010. Should we ask them to send a corrected 1099A for August, 2011 (when they purchased the property) or for May, 2010 when we notified them of the abandonment? If they ever forgive the debt, we would not qualify for the 2-year primary residence requirement if the December 2011 date is used.
BBill, Apr, 2012
A 1099A is intent to forgive, whereas a 1099C is the form showing actual forgiveness. I recommend that you speak with a tax professional who can help clarify which date can be used to determine the date of sale and the necessary time frame to qualify the house as your acceptable primary residence.
JJeff, Mar, 2012
I have received a 1099A for tax year 2010 (foreclosure date Sept,2010) The bank sold the property July 2011. I did not receive a 1099C for 2011. Does the lending bank have a time limit for issue? (Mortgage amount $205K plus costs, sales price $38K)