Reporting a Foreclosure and Canceled Debt

Click the examples to review three different versions of how a foreclosure was reported on Form 8949 and Schedule D based on the information provided on Form 1099-A.

• Example 1 - Foreclosure results loss (nondeductible)
• Example 2 - Foreclosure results in gain - Section 121 Exclusion applied to total gain
• Example 3 - Foreclosure results in gain - Section 121 Exclusion applied to part of gain

Failure to report the transaction on Form 8949 and Schedule D may result in an IRS notice to the taxpayer.