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sale of pesonal residence

Taxfun
Level 3

a taxpayer sold his house over $250,000 and total gain is under Sec 121 exclusion amount. He didnot receive a form 1099-S. A form 1099-S is required when sales proceeds over $250,000. this transaction is required to be reported on the tax return if form 1099-S was issued. in his case the form 1099-s is required but was not issued. is this transaction still be required on the tax return?

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16 Replies 16
abctax55
Level 15

A form 1099-S is required when sales proceeds over $250,000.

I don't think this is a valid statement.

this transaction is required to be reported on the tax return if form 1099-S was issued.

I KNOW this isn't a valid statement

*******

I report all sales of real estate on F.8949 > Sch D, even the sale of a personal residence (despite the fact the IRS instruction say it's not necessary..) to avoid future love letters from the IRS.  YMMV.

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BobKamman
Level 14

I was surprised that this is what IRS says, because I often see transactions over $250K/$500K that are not reported on a 1099-S.,  Taxpayers are not going to get an IRS notice if there is no 1099-S, so I don't line my pockets with extra cash for reporting qualified primary-residence sales  when there is no 1099-S.  

"The following is a list of transactions that are not reportable; however, you may choose to report them. If you do, you are subject to the rules in these instructions.

  1. Sale or exchange of a residence (including stock in a cooperative housing corporation) for $250,000 or less if you received an acceptable written assurance (certification) from the seller that such residence is the principal residence (within the meaning of section 121) of the seller and the full amount of the gain on such sale is excludable from gross income under section 121. If the certification includes an assurance that the seller is married, the preceding sentence shall be applied by substituting "$500,000" for "$250,000." If there are joint sellers, you must obtain a certification from each seller (whether married or not) or file Form 1099-S for any seller who does not make the certification. Also, the seller must include in the certification that there has been no period of nonqualified use (as that term is defined in section 121(b)(5)(C)) after December 31, 2008, and as required by section 6045(e)(5)(A)(iii), that the full amount of the gain from the sale is excludable under section 121. The certification must be signed by each seller under penalties of perjury."

https://www.irs.gov/instructions/i1099s 

abctax55
Level 15

if there is no 1099-S, 

And your clients "always" bring you every single form ? Mine don't.

AND you are "assuming" I pad my bill for taking this proactive move; we both know what that can spell.

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sjrcpa
Level 15

I do what Anna does. Lesson learned the hard way. I've had clients say they didn't get a 1099-S so I didn't report it. IRS begged to differ.

Clients don't know what a 1099-S is, nor remember they got it at closing on a half sheet of paper along with all of the other settlement papers,


ex-AllStar
BobKamman
Level 14

Some clients are smarter than others.  I don't blame all clients, for the documents overlooked by the least intelligent among them.  

IRonMaN
Level 15

I've had folks sell property and when you ask them whether or not they got a 1099 and they say "no"  I proceed to open the paperwork for the sale and there sits the 1099 that they never received.  I have to be honest though, I tend to report them only when I see a 1099 or I think the client probably received one.    The local closing companies are pretty good about not generating 1099s when the homes qualify for the exclusion.   But then again, I don't see a lot of million dollar house sales here ------------------------- housing is a little more affordable here than in CA.  

I'm keeping this job. But I am selling surplus anvils on the side. If you are interested please call 867-5309
BobKamman
Level 14

@IRonMaN " I proceed to open the paperwork for the sale and there sits the 1099 that they never received."

I do the same thing.  Sometimes I find a refund check for overpaid fees.  Sometimes I don't keep it and try to deposit it in my own account.  

rbynaker
Level 11

It's really just a geography thing.  If I hadn't spent my tax career in a major metropolitan area, I might think it absurd to report every property sale.  But I didn't have that path.  Even the crappiest 1 BR condo around here is going to sell for at least $300K and I guarantee you there will be a 1099-S, whether the client thinks so or not.  Chances are it will be buried in the 200 pages of documents that were signed at closing.  There's no point in asking the client about it, they're not a reliable source of information on this.  If it didn't come in the mail at the end of January in an envelope marked "Important Tax Document" in their mind it doesn't exist.

So I report all sales.  In most cases there is a full 121 exclusion even if I just use the purchase price as basis with no improvements.  Counties/cities around here have all of the sale history online and it's less than 60 seconds to look up and print-to-PDF the property history.

sjrcpa
Level 15

I'm in the same metropolitan area as Rick.


ex-AllStar
BobKamman
Level 14

Maybe it is a geography thing, like California taxpayers who owe $500,000 are not assigned to an RO but Nebraska taxpayers who owe $100,000 are.  I don't see 200 pages of documents on a house sale, but I often see 20, and often one of them is the form that the escrow company supplies to the seller asking them to sign if they qualify for the 250K/500K exclusion.  Maybe they should not be doing that for any sale over 250K, but in my neck of the woods they are, and when I see it I don't see a 1099-S. And I don't report the sale on the return, and I never see a CP-2000.  

I have been paying someone for the last 20 years to answer the phones and tell callers we are not taking new clients.  The old ones just keep coming back.  I have enough work to do, helping them with forms that IRS requires, that I don't waste time on forms that are not needed.  I am sure that the AUR program has some criterion before chasing after a 1099-S report -- maybe when the proceeds are more than a million dollars.  But then, they might have some criterion for chasing after a change of address when mortgage interest is being deducted.  

I will be sure to let you know when I see my first CP-2000 or CP-2501  for a return where my conclusion was that no 1099-S was issued.  Meanwhile, the fact that you saw one in 2008 doesn't mean that IRS hasn't since figured out they have better things to do.  

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abctax55
Level 15

Bob, can we agree that practices differ, especially in different parts of the country? 

What seems to have worked just great for YOU doesn't necessarily apply to all.  

As I have chosen to (proactively and FREE OF CHARGE) report all sales, I can't produce that CP2000.

Which is a good thing.

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BobKamman
Level 14

@abctax55 "AND you are "assuming" I pad my bill for taking this proactive move; we both know what that can spell."

Well, no, you could be padding every client's bill to make up for what you don't charge one client for unneeded work.  All you have to sell is time, so you're charging for it one way or the other.  

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abctax55
Level 15

"... so you're charging for it one way or the other.  "

Only if one subscribers to the theory that every minutes in the office HAS to be billed to some client.  That's not how I do things.

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IRonMaN
Level 15

"Only if one subscribers to the theory that every minutes in the office HAS to be billed to some client"

Sounds like the place I started out after college.  It's nice to no longer work there.

I'm keeping this job. But I am selling surplus anvils on the side. If you are interested please call 867-5309
abctax55
Level 15

I apologize to everyone for my answer (s).

I thought this thread was about the sale of a peRsonal residence.   

 

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IRonMaN
Level 15

Thanks - I tried to buy a vowel but the "I" that I bought didn't seem to help solve the puzzle.  I never would have guessed that we needed a "R"

I'm keeping this job. But I am selling surplus anvils on the side. If you are interested please call 867-5309