Tax Preparer Guide to 1040 Chapter 13 Sale of Property/Assets

Question 1

Form 1099-A

Answer 1

Acquisition of Abandonment of Secured Property

This form is used to report a lender’s acquisition of property on which there is mortgage where the borrower abandoned the property or the lender acquired it through foreclosure.

Question 2

Form 1099-B

Answer 2

Proceeds from Broker and Barter Exchange Transactions

This form lists the date of the sale or exchange, the date of acquisition, the quantity sold, the tyoe of asset (e.g., stock, bonds) how proceeds have been reported to the IRS (e.g. gross proceeds less commissions and option premiums), the cost or other basis (if known), and whether the gain or loss is short or long term

Question 3

Form 1099-DIV

Answer 3

Dividends and Distributions

Is used to report dividends paid and capital gain distributions of $10 or more, section 1202 gain (from the sale of qualified small business stock in a C corporation), unrecaptured depreciation, and collectibles gain.

Question 4

Form 1099-S

Answer 4

Proceeds from Real Estate Transactions

Lists the gross proceeds on the sale as well as other information about the transaction (?e.g., closing date; description of the property sold).

Question 5

Schedule K-1

Answer 5

Schedule K-1 is an Internal Revenue Service (IRS) tax form issued annually for an investment in partnership interests. The purpose of the Schedule K-1 is to report each partner’s share of the partnership’s earnings, losses, deductions, and credits.

Question 6

Depreciation Recapture

Answer 6

is a re-characterization of a gain that would normally be taxed at a favorable capital gain rate of 15% as ordinary income subject to a higher tax rate. The re-characterization depends on whether the property is tangible personal property or real property.

Question 7

Unrecaptured depreciation

Answer 7

for residential real property, unrecaptured depreciation is usually the total depreciation expense that was deducted prior to sale of the set. Unrecaptured depreciation is recognized as income when the property to which it relates is sold.