How to enter 1099-A Cencellation of Debt for a Rental Prperty Mortgage

[BeckerMgt]

When I enter the 1099-A on it's own with the estimated value of the property on it Proseries creates a Canceled Debt worksheet that computes the gain/loss. I don't see any way to link that to the existing Asset Worksheet for Schedule E. When I then enter the disposition on the Asset Worksheet for $0 it creates a loss that seems like it's doubling the loss of the property value entered on the 1099-A. Since there's no way to link the 1099-A to the asset it seems my only choices are to not enter the 1099-A but enter the canceled debt amount on the asset as the sale price OR enter the 1099-A and enter the current value of the property as the sale price on the asset so that the sale of the asset $0s out.

Does either of those seem more correct than the other to anyone?      

[Terry53029]

Right after line 30 on the canceled dept work sheet is where you can link to your schedule E

[BeckerMgt]

You're right, I totally missed that. Now I've clicked that and it puts the Net Income of the debt cancellation onto Schedule E. When I enter the disposition of the property on the asset worksheet if I enter $0 for sales price it still seems like I'm double-dipping on the loss. Do I put the value of the asset as the sales price to $0 it out?      

[sjrcpa]

Don't enter 0 on the asset sale worksheet.

[TaxGuyBill]

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@BeckerMgt wrote:

How to enter 1099-A Cencellation of Debt for a Rental Prperty Mortgage ...

When I enter the 1099-A on it's own with the estimated value of the property on it Proseries creates a Canceled Debt worksheet that computes the gain/loss.    

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I'm confused.  A 1099-A is not cancellation of debt.

Generally, just entering the proper amount in the disposition section (like a sale) gets the job done.

[BeckerMgt]

The 1099-A was from his mortgage company for the abandonment of his rental property that they acquired. The amount on it was for the balance of his mortgage that they were forgiving. I linked it to the Cancellation of Debt worksheet which I then linked to the Schedule E. Since it only listed the net of the forgiven amount (minus the property value) on the schedule E I don't think I can then again take a loss on the property value to dispose of the property on the asset worksheet. 

[TaxGuyBill]

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@BeckerMgt wrote:

The amount on it was for the balance of his mortgage that they were forgiving.

I don't think I can then again take a loss on the property value to dispose of the property on the asset worksheet. 

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Please re-read my prior comment.  As I said, a 1099-A is not a statement of forgiveness (read the boxes - there is nothing about forgiveness).  If debt was cancelled, your client would/will receive a 1099-C.

At some point in the future (as long as 10 years), the mortgage company may forgive any excess debt.  But if the property value was in excess of the mortgage amount, there may not be anything to forgive (they got their money from selling the property).

A 1099-A means you report it as a disposition, and the 'sale' price is ONE of the two amounts in the boxes (depending on if the taxpayer was liable, which is partly based on State law).

https://apps.irs.gov/app/vita/content/36/36_03_060.jsp?level=advanced