If you received a Form 1099-A, Acquisition or Abandonment of Secured Property, you need to determine if there has been a cancellation of debt. The lender should have sent you a Form 1099-C Cancellation of Debt if any debt was canceled. If you have not received a Form 1099-C, you may want to contact your lender to determine if any debt has been canceled. Also see Form 1099-C - Cancellation of Debt.
The foreclosure or repossession of property is treated as a sale of property from which you may realize gain or loss. Use the Worksheet for Foreclosures and Repossessions on page 13 of IRS Publication 4681 to compute the amount of any gain or loss to claim. Where you enter your 1099-A information depends on whether the form you received is for your main home, business property, or investment property.
Main Home
If this was a foreclosure of your main home, follow the steps below to enter the information. Any gain computed (that is not excluded due to this being your main home) will be taxable. A loss will not be deductible on your return, since it is personal-use property. See the FAQ Sale of Home - Sale of Main Home for details.
Business Use
To enter the gain or loss for business property, use the Sale of Business Property Worksheet in the appropriate business section (Schedule C, E, or F). See the following FAQs for details on accessing the data entry for each type of business.
To enter the gain or loss for investment related property (on Schedule D), use the steps in the Form 1099-B - Entering in Program FAQ.
Enter the transaction information:
Please enter an appropriate description.
The Date acquired will be the date you purchased the property.
The Date sold will be the date shown in Box 1 (Form 1099-A).
The Cost or other basis will be the amount from Line 7 of the Worksheet for Foreclosures and Repossessions.
The Sales proceeds will be the amount from Line 6 of the Worksheet for Foreclosures and Repossessions.
Note. If this is personal property (possibilities are a vacation home, timeshare, vehicle and some inherited property), continue to the screen titled Investment Sales - Adjustment Code(s), then select "L - Other Non-Deductible Loss (including Personal Loss)" from the Other adjustment code drop-down to indicate the property is personal-use property. Any computed gain will be taxable; a loss will not be deductible on your return, since it is personal-use property.