how do you treat a rental that had a 1099C for the building.

[shf1957]

Have a client that had a rental collected rent  but I see in Feb there was a 1099C for almost 100,000.   Then I also see another 1099C for almost the same amount on their personal home.  Been depreciating the rental... do treat it as it's SOLD for that? 

[Just-Lisa-Now-]

do they still have the home?  theres more to this story.

[shf1957]

Still kept the rental......and rented it all year...  ( 1099C is dated for early feb) and they plan to keep renting it.  I have depreciation going on it..... from prior years with a lot still left.

[Just-Lisa-Now-]

so did they get some kind of loan modification? why the canceled debt?

[shf1957]

can't find that out yet...   if not how do i treat it...  if so how do i treat it?

[shf1957]

YES   loan modification.

[Just-Lisa-Now-]

Id start here

https://www.irs.gov/pub/irs-pdf/p4681.pdf

[qbteachmt]

There is nothing here that indicates a sale happened. 1099-S is Sale. 1099-C is forgiven debt, but that doesn't drive if it is taxable.

You should find out what this is and don't make any assumptions. It can be Principal adjustment, and it might not even be taxable under whichever Federal plan allowed the adjustment. It could be the same lender and the same program on both properties. Or, it is likely two different programs, since one is primary residence and one is rental/investment property.

There are a bunch of Federal programs that include being extended for years now, that could be what happened here. HAMP, HARP, HOPE, PRA, HHF, UP, HAFA, etc.

These owners have paperwork somewhere and know their story. We don't know their story.