Form 1099-A
Form 1099-A is for the “Acquisition or Abandonment of Secured Property.” Homeowners who have been foreclosed upon might be surprised to find one of these turning up in their mailboxes after year’s end. It means that the loan you took out was secured by tangible or real property. You no longer have the property, either because the lender took it back or because you walked away from the obligation, such as by offering a deed in lieu of foreclosure. Either way, the Internal Revenue Service (IRS) takes the position that the associated unpaid loan represents income to you because you accepted money under the terms of the loan contract and you’re keeping it—you’re not paying it back. The IRS doesn’t care what you did with the money or that you no longer have the enjoyment of the property. Thus, you’ll receive Form 1099-A.
A Form 1099-A Loophole
The good news here is that the Mortgage Debt Relief Act of 2007 provides that you don’t generally have to include the amount of your unpaid loan balance as income on your tax return. The bad news is that this tax provision has been on-again-off-again since its inception. It’s back, at least through December 2025, under the terms of the Consolidated Appropriations Act, 2021. You can calculate whether this “income” will be forgiven for tax purposes by using the information included on your Form 1099-A to complete Schedule D. Use this form if it was your personal property. Use Form 4797 if it was business property. This table provides an overview of the form, along with instructions and other informational resources.
Form 1099-A Summary
The form will tell you whether your gain or loss was short-term or long-term. This is an important distinction because short-term gains are taxed at ordinary income rates, while long-term gains are taxed at more favorable rates of 0%, 15%, or 20% as of tax year 2021, depending on your overall taxable income. You would have a short-term gain if you owned the asset for less than a year and made money on it when you sold it. Not all brokerages will issue multiple 1099s for investments, while some will issue them for interest, and some for dividends. They might issue Form 1099-B as well, or include all this information on a “Composite 1099 Form.” These composite forms are sometimes lacking critical information, so you might want to ask a tax professional for help if you receive one.
