Abandonded personal residence, form 982 and 121 exclusion.
If you get a 1099-A for abandonment of personal residence (client qualifies for 121 exclusion ) Do you fill out a 982 for discharge of Indebtedness. I guess I don't understand if the debt was discharged or not, they did not get a 1099-C. They did get a GRANT DEED IN LIEU OF FORECLOSURE which has a slightly higher figure for amount of unpaid debt($209063.67) than the box 2 of the 1099-A (bal. of princ. outstanding) which is $$206614.00. Box 4 (FMV) on 1099-A is $1993836.00 and their basis is $159900.
If I fill out a 982 would line 2 (amt of debt discharged be the bal. of princ. (box 2 of 1099) of $206614. OR the figure off the Grant Deed in Lieu of Forclosure of $209063.67??? And since they are not retaining ownership of the residence do I even put anything on line 10b (applied to reduce the basis of princ. residence? If so, would it be their basis in the house or the FMV off the 1099-A.
I'm new and clueless, someone please help me. They want this thing by the 15th.
Additionally, they received a 1099-Misc for $1000.00 that was some kind of incentive to do this but have it listed in box 7 (nonemp. comp) rather than box 3 other income.
We have tried to get them to change it but to no avail. Do I need to do a C-EZ, show it as income and then deduct as expense showing trf to line 21 with an explanation. Or can I put directly on 21 with explaination saying box 7 s/b box 3? All this to try to avoid them having to pay SE tax on it.
