Each 1099-A is different and reporting them on a tax return will vary depending on the taxpayer's situation. Publication 544,  "Sales and Other Dispositions of Assets" will help to clarify where to report these transactions.

Generally, this will be entered in Screen 17, Dispositions.


Solution

From IRS Publication 544:

You may have reportable income or loss because of such acquisition or abandonment. Gain or loss from an acquisition generally is measured by the difference between your adjusted basis in the property and the amount of your debt canceled in exchange for the property, or, if greater, the sale proceeds. If you abandoned the property, you may have income from the discharge of indebtedness in the amount of the unpaid balance of your canceled debt. You also may have a loss from abandonment up to the adjusted basis of the property at the time of abandonment. Losses on acquisitions or abandonment of property held for personal use are not deductible. See Pub. 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonment (for Individuals), for information about foreclosures and abandonment.
The home foreclosure and debt cancellation worksheet can be found by viewing the IRS article Home Foreclosure and Debt Cancellation.
 
Also review:
  • Instructions on the back of Form 1099-A.
  • Form 982 instructions show how to determine what amounts, if any, are taxable, and whether basis in other assets needs to be adjusted.
  • Examples in Publication 4681 & Publication 544.

Reporting Form 1099-A with Insolvency
 
Note:  Insolvency exception applies only to debt cancellation income, not to property transferred to satisfy creditors. 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.
 
Handling of this in Lacerte software for just a 1099-A would be treated as a Disposition in Screen 17, Dispositions, filling in Date Acquired/Date Sold, Sales Price, Basis of asset at time of abandonment.   Also Fill in subsection for Sale of Home if this applies to situation.
 
The Lacerte Tax program does not have specific input for the following boxes:
  • Box 2 - Balance of Principal Outstanding
  • Box 4 - Fair Market Value (FMV) of Property
  • Box 5 - Was Borrower Personally Liable for Repayment of the Debt
If the amount in box 4 is less than the amount in box 2, and the debt is canceled, you may have cancellation of debt income.  See Individual 1099-A, 1099-C, Foreclosure, Repossession, Quitclaim, Short Sale
 
Refer to the Form 1099-A instructions or Publication 544 for more information.
 
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