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Reporting Form 1099-A for an individual return in Lacerte

SOLVED•by Intuit•92•Updated almost 2 years ago

How you report Form 1099-A will vary depending on the taxpayer's situation. Refer to IRS Pub 544 for information on where to report these transactions.

Lacerte doesn't have direct inputs for some boxes on Form 1099-A. See the bottom of this article for information about missing inputs.

Reporting Form 1099-A with insolvency

Insolvency exception applies only to debt cancelation income, not to property transferred to satisfy creditors, and gain or loss can result from such transfers. However, in bankruptcy, any tax liability that is created by the individual's bankruptcy is taxed to the bankruptcy estate. The insolvency exception for a 1099-A is treated as a disposition in Lacerte.

Follow these steps to report a 1099-A with insolvency:

  1. Go to Screen 17, Dispositions.
  2. Under the Dispositions (Schedule D,4797, etc.) section, enter the following information about the asset at the time of abandonment:
    • Date acquired (negative date=various)
    • Date sold (negative date=various)
    • Sales price
    • Cost or other basis (do not reduce by depreciation)
  3. Complete the Sale of Home subsection, if applicable.

Reporting a Form 1099-A abandonment as an ordinary loss

You can report a 1099-A abandonment as an ordinary loss in the Individual module of Lacerte. Loss from abandonment of a business or investment property is deductible as a loss. A loss from an abandonment of business or investment property that isn't treated as a sale or exchange is usually considered an ordinary loss. Refer to Pub 544 for more information.

If you want to keep the program from limiting the loss as though it is a capital loss for a business property, you should report it on Screen 17.1 Dispositions. It should be reported on Form 4797 not Schedule D.

Follow these steps to report the abandonment of business property:

  1. Go to Screen 17, Dispositions.
  2. Under the Dispositions (Schedule D,4797, etc.) section, complete the following fields, if applicable:
    • Description of property
    • Date acquired (negative date=various)
    • Date sold (negative date=various)
    • Sales price
      • Enter 0 or leave this field blank.
    • 1=short-term, 2=long-term [O]
    • Cost or other basis (do not reduce by depreciation)
      • This is likely the amount reported on Form 1099-A, box 4.
  3. Scroll down to the Form 4797 section.
  4. Enter the Depreciation allowed (-1=none, triggers 4797).
    • This entry is mandatory to generate Form 4797.
  5. Complete any other fields applicable to the asset.
  6. Check the box labeled Not a Form 1099-B/1099-S transaction.
  7. Go to the Forms tab and verify the following:
    • The loss is being reported on Form 4797, line 18b (cost basis less the depreciation).
    • The loss is then flowing to Form 1040, Schedule 1, line 4.

For a personal property, the disposition is entered on Screen 17, Dispositions, but it's reported on a Schedule D as an ordinary loss transaction. 

Follow these steps to report the abandonment of personal property:

  1. Go to Screen 17, Dispositions.
  2. Under the Dispositions (Schedule D,4797, etc.) section, complete the following fields, if applicable:
    • Description of property
    • Date acquired (negative date=various)
    • Date sold (negative date=various)
    • Sales price
      • Enter 0 or leave this field blank.
    • 1=short-term, 2=long-term [O]
    • Cost or other basis (do not reduce by depreciation)
      • This is likely the amount reported on Form 1099-A, box 4.
  3. Scroll down to the Schedule D section.
  4. Check the box labeled Personal Loss.
  5. Go to the Forms tab, verify the following:
    • The amount is being reported on Form 8949 with code L.

Additional information

Missing inputs

Lacerte doesn't have inputs for some boxes on Form 1099-A, including:

  • Box 2: Balance of Principal Outstanding
  • Box 4: Fair Market Value (FMV) of Property
    • If the amount in box 4 is less than the amount in box 2, and the debt is canceled, the client may have cancelation of debt income. Refer to this article for more information about cancelation of debt income.
  • Box 5: Was Borrower Personally Liable for Repayment of the Debt

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