Instructions For Forms 1099-A And 1099-C - 2006 (Page 3 of 27) in pdf

2006

Department of the Treasury

Internal Revenue Service

Instructions for Forms

1099-A and 1099-C

Section references are to the Internal Revenue Code unless otherwise noted.

In this case, only one form for each borrower must be filed on

Reminder

behalf of all owners with respect to the loan. Similarly, for bond

In addition to these specific instructions, you should also use

issues, only the trustee or similar person is required to report.

the 2006 General Instructions for Forms 1099, 1098, 5498, and

Governmental unit. A governmental unit, or any of its

W-2G. Those general instructions include information about:

subsidiary agencies, that lends money secured by property

•

Backup withholding

must file Form 1099-A.

•

Magnetic media and electronic reporting requirements

•

Subsequent holder. A subsequent holder of a loan is treated

Penalties

•

as the lender for purposes of the reporting requirement for

Who must file (nominee/middleman)

•

events occurring after the loan is transferred to the new holder.

When and where to file

•

Multiple lenders. If more than one person lends money

Taxpayer identification numbers

•

secured by property and one lender forecloses or otherwise

Statements to recipients

•

acquires an interest in the property and the sale or other

Corrected and void returns

•

acquisition terminates, reduces, or otherwise impairs the other

Other general topics

lenders’ security interests in the property, the other lenders

You can get the general instructions from the IRS website at

must file Form 1099-A for each of their loans. For example, if a

or by calling 1-800-TAX-FORM (1-800-829-3676).

first trust holder forecloses on a building, and the second trust

holder knows or has reason to know of such foreclosure, the

second trust holder must file Form 1099-A for the second trust

Specific Instructions for Form 1099-A

even though no part of the second trust was satisfied by the

File Form 1099-A, Acquisition or Abandonment of Secured

proceeds of the foreclosure sale.

Property, by February 28, 2007 (April 2, 2007, if filed

Abandonment

electronically), for each borrower if you lend money in

connection with your trade or business and, in full or partial

An abandonment occurs when the objective facts and

satisfaction of the debt, you acquire an interest in property that

circumstances indicate that the borrower intended to and has

is security for the debt, or you have reason to know that the

permanently discarded the property from use. You have

property has been abandoned. You need not be in the business

“reason to know” of an abandonment based on all the facts and

of lending money to be subject to this reporting requirement.

circumstances concerning the status of the property. You will be

deemed to know all the information that would have been

Coordination With Form 1099-C

discovered through a reasonable inquiry when, in the ordinary

If, in the same calendar year, you cancel a debt in connection

course of business, you become aware or should become

with a foreclosure or abandonment of secured property, it is not

aware of circumstances indicating that the property has been

necessary to file both Form 1099-A and Form 1099-C,

abandoned. If you expect to commence a foreclosure,

Cancellation of Debt, for the same debtor. You may file Form

execution, or similar sale within 3 months of the date you had

1099-C only. You will meet your Form 1099-A filing requirement

reason to know that the property was abandoned, reporting is

for the debtor by completing boxes 5 and 7 on Form 1099-C.

required as of the date you acquire an interest in the property or

However, if you file both Forms 1099-A and 1099-C, do not

a third party purchases the property at such sale. If you expect

complete boxes 5 and 7 on Form 1099-C. See the instructions

to but do not commence such action within 3 months, the

for Form 1099-C on page AC-2.

reporting requirement arises at the end of the 3-month period.

Property

Statements to Borrowers

Property means any real property (such as a personal

If you are required to file Form 1099-A, you must provide a

residence), any intangible property, and tangible personal

statement to the borrower. Furnish a copy of Form 1099-A or an

property except:

acceptable substitute statement to each borrower. For more

•

No reporting is required for tangible personal property (such

information about the requirement to furnish a statement to the

as a car) held only for personal use. However, you must file

borrower, see part M in the 2006 General Instructions for Forms

Form 1099-A if the property is totally or partly held for use in a

1099, 1098, 5498, and W-2G.

trade or business or for investment.

•

Account Number

No reporting is required if the property securing the loan is

located outside the United States and the borrower has

The account number is required if you have multiple accounts

furnished the lender a statement, under penalties of perjury,

for a borrower for whom you are filing more than one Form

that the borrower is an exempt foreign person (unless the

1099-A. Additionally, the IRS encourages you to designate an

lender knows that the statement is false).

account number for all Forms 1099-A that you file. See part L in

the 2006 General Instructions for Forms 1099, 1098, 5498, and

Who Must File

W-2G.

In addition to the general rule specified above, the following

Box 1. Date of Lender’s Acquisition or

rules apply.

Knowledge of Abandonment

Multiple owners. If there are multiple owners of undivided

interests in a single loan, such as in pools, fixed investment

For an acquisition, enter the date you acquired the secured

trusts, or other similar arrangements, the trustee, record owner,

property. An interest in the property generally is acquired on the

or person acting in a similar capacity must file Form 1099-A on

earlier of the date title is transferred to the lender or the date

behalf of all the owners of beneficial interests or participations.

possession and the burdens and benefits of ownership are

Cat. No. 27991U

Instructions For Forms 1099-A And 1099-C - 2006 Page 3

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