Q: Hi. I received a 1099-a for the 2016 tax year. I filed bankruptcy in 2014 and it was discharged. Must I report on taxes
The property was abandoned by me. I filed bankruptcy. Eventually it was foreclosed on. They settled it somehow in 2016 and sent me paperwork showing it was paid. Box 5 is NOT checked on the 1099-a . Bal was $107,000 and fair mkt value was $60,000
A: If you receive any type of 1099, it means that the IRS has been notified of the income. The income likely comes from debt relief (presumably the negative difference between the value of the foreclosed property and the mortgage). If you disagree with the numbers or valuation you will need to contact the foreclosing bank. If you take a contrary position on your 1040 to the 1099 in reporting income, you will be audited. If there is an error by the bank, you may "win" the audit, but you will be audited nonetheless.
A: File IRS form 982 with your tax return showing that you were insolvent at the time. That usually solves the problem without an audit.
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