Acquisition Or Abandonment Of Secured Property After Filing

[Bhaltair]

s About Taxes)/acquisition or abandonment of secured property after filing Advertisement Expert: John Stancil, CPA - 2/5/2011 I foreclosed in 2010 but had not received any information from BofA regarding the next steps to take or what would happen to me.  I had since filed a normal 1040ez and received a nominal return.  Just today I received a 1099-A "Acquisition or abandonment of secured property" with box #2 being 117k and box 4 being 74k.  Obviously there's a difference and I'm assuming that's considered taxable income?

What do I do now?  I don't want the IRS coming after me and freezing my bank account or garnishing my wages for whatever I'm going to owe.  This was my first house, first foreclosure, and first time dealing with the IRS in regards to such a large amount.

Thanks for any help you can provide!

ANSWER: James,

Thanks for your question.

You will need to file an amended return, Form 1040X.

The difference between the two amounts is taxable income, reported on line 21 of the 1040.  

You may be eligible for an exclusion.

If you had lived in the house as your main home and owned it for 24 of the past 60 months AND if you had never refinanced and taken money out you can exclude tax on the gain.  If this is the case, complete Form 982 and show the reason for the exception.

If this is not the case, you still need to complete Form 982 and send it in, along with your amended return.

Hope this helps.

John Stancil, CPA

---------- FOLLOW-UP ----------

Thanks John.

It was my main house and I had owned it since 2006.  I'll review form 982 and file an amended return.  Obviously the difference will be taxable income which in my rough calculation will be an approximate 8-9k that I owe.  Will they automatically try to come after me or can I talk to them about paying a payment plan?  I just don't want to wake up next week with nothing in my bank account.  I definitely want to do the right thing, but I can only do what i can do.

Btw, I filed using TurboTax.  Should I amend with them or separately with the IRS?  I tried to input 1099-A info on TurboTax and they would only allow 1099-C since it's confirmation of debt forgiveness.

[Sotirios]

If you have not refinanced and taken money out, the COD income is not taxable.

You probably cannot file an amended return with TurboTax, if you can, go ahead and do it.  If not, do it by hand or hire someone to do it for you.

The IRS will not come after you immediately.  You can submit with your return a Form 9465 to request an installment agreement.

Hope this helps.

John Stancil, CPA