My client has received two year 2010 1099-A's for what was their residence. The first 1099-A was for the first mortgage, while the second 1099-A was for the second mortgage. Both indicate the borrower was personally responsible for the debt.
The total of the balances outstanding showing in box 2 of the 1099-A's exceeds the fair market value of the property when the lenders acquired the property, although the balance outstanding on the first mortgage was less than the fair market value..
My client was only relieved of the second mortgage through bankruptcy which occured in 2011. Doesn't this mean that the cancelation occured in year 2011?
I suspect there will be a cancellation of debt 1099 issued by the second mortgage bank for tax year 2011, but I got to wondering if there isn't something to report on the year 2010 tax return. Does receipt of a 1099-A in and of itself necessitate reporting on the year 2010 tax return, when debt cancellation occured in year 2011?