1099-S Proceeds From Real Estate Transactions

[MRG]

I just received a 1099-S from a client and I am not sure how to enter in Proseries Professional.

Can someone please provide me steps on how to enter the 1099-S and if i need additional information from my client

[sjrcpa]

Well, for starters you need the basis of what they sold.

Use the 1099-B worksheet just like a stock sale but say no 1099-B received.

[MRG]

What Document would I find the basis at?

[sjrcpa]

The Settlement Sheet for the purchase.

Then there could be improvements.

You'll also need the Settlement Sheet for the sale. That 1099-S only has the Sale Price. There could be lots of expenses of sale.

[jeffmcpa2010]

"Use the 1099-B worksheet just like a stock sale but say no 1099-B received." is correct unless it was a personal residence (there is a definition of that) then it would go on "home Sale Worksheet"

[MRG]

Use this 1099-B and enter it here

What info do I enter? Would I enter the data entry in the 1099-B Worksheet under what session and the number. This is from the payoff letter

TOTAL AMOUNT TO PAY LOAN IN FULL $ 717,499.33
These figures are good through May 27, 2022. 
This loan is due for the June 01, 2022 payment.
The current total unpaid Principal Balance is: $ 715,912.93
Interest at 2.75000% $ 1,402.40
Document Recording $ 184.00
Third Party Payoff $ .00
TOTAL AMOUNT TO PAY LOAN IN FULL $ 717,499.33
Escrow Information: Your current escrow balance is $ 4,513.45.
Insurance Policy(s)
Payee Name Next Due Projected Amount
California Auto Ins Co 08-31-22 1,393.15
Taxes and/or Additional Escrow Items
Escrow Items Next Due Projected Amount
San Diego County 11-22 7,361.41
San Diego County 03-23 7,361.41
May 23, 2022 Loan Number: 3010030522
Last Escrow Disbursement Amounts & Dates Disbursed:
Taxes $ 7,361.41 03-25-22
Homeowners Insurance $ 1,393.15 08-18-21
Per Diem after Expiration - Funds received on or after May 27, 2022

[jeffmcpa2010]

The Payoff letter is probably not useful in a sale situation.

I would suggest that you find a Mentor you can work with who will help you out when you run into a situation that your prior training does not appear to have prepared you do deal with, based upon the questions being asked.

I learned a long time ago, that it is sometimes better for me to turn down a project, than try to move forward in an area that I do not have enough knowledge to properly complete the project.

[MRG]

I do understand what you are saying, but how are you suppose to learn if you do not try to learn something new. I do have a mentor but she's busy right now. But with the help and knowledge I have i was able to figure it out. Thank You!!

[Camp1040]

Try reading some of the research material you probably have on hand or go to irs.gov and search basis of assets and how to report income from a 1099-S.

[MRG]

Thank you!

[ljr]

the NATP and other organizations have good training and continuing education classes

tax 101 the mortgage amount does not calculate into the sale calculation 

[qbteachmt]

Mortgage payoff has to do with the Banking info the net settlement amount or proceeds from the sale. That's not a tax concern.

Your taxpayer client has a specific amount invested in the house, whether or not they ever borrowed the money. That's why the starting point is Basis = original Cost. Not how much actual money they paid at their purchase.

Then, through their ownership period, they might have made improvements, such as pool or driveway or deck or fence. The cost of specific improvements (not repairs and maintenance) add to Basis = further investment in the property.

The sale has some associated costs, such as commissions, closing fee, title fee. Not loan payoffs. The sale expenses are allocated to the sale price, reducing the gain for your taxpayer. Price minus cost of sales minus basis = gain on the sale. Even if all the money from the sale goes to pay off the mortgage, in this example, there still would be gain on the sale. Just because the client didn't get all the money or gets less money due to paying debt, isn't a tax issue. It's Banking.