Question

My spouse and I sold our home in a short sale. We received two 1099-C short sale forms. Both 1099-C Form short sale documents have our names on them, but one has her name first and the other has my name first. Box 2 on each contains the same amount. How do I report this?

Answer

There are two possibilities regarding the recording of the 1099-C Form short sale. The lender might have issued two 1099-C short sale documents each containing the full amount of the cancelled debt. If this is true, report only the total debt cancelled — not the combined amount from both Forms 1099-C. If you’re married filing separately, you’ll each report your share of the cancelled debt on your own return.

However, each 1099-C might instead report half of the cancelled debt. If so, combine the amounts from the two documents to report the income on your joint return with your spouse. If you’re married filing separately, report your share of the total cancelled debt on your own return.

If you meet the criteria, you might be able to exclude income from the cancellation of debt using Form 982.

Related Topics

Related Resources

Form 1099-B, Proceeds From Broker and Barter Exchange Transactions

If you sold stock, bonds or other securities through a broker or had a barter exchange transaction, you will likely receive a Form 1099-B. Learn more from H&R Block.

IRS Letter 2030 – Proposed Changes to Your Tax Return

Learn more about letter 2030 and how to handle an IRS adjustment to your business return with help from the tax experts at H&R Block.

IRS Letter 5037 – Second Notice

Learn more about IRS Letter 5037 and how to handle an inquiry of your business' income with help from the tax experts at H&R Block.

PATH Act 2018: Impact On Your Taxes

Get the latest updates on the Protecting Americans from Tax Hikes Act. Learn how the PATH Act may affect your tax refund this year.