Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Cancellation of Debt—Principal Residence

Reporting a Foreclosure and Canceled Debt (continued)

Case Study

Frank bought his home on May 14, 2003. His basis in the home was $200,000. After he lost his job last year, he was not able to make the payments. The bank foreclosed in June of the current year, and Frank moved out. At the time of the foreclosure, the fair market value of the home was $125,000 and the principal balance of the mortgage was $195,000. All of the debt was incurred to purchase the home. Frank received Form 1099-C for the amount of debt canceled by his bank.

Click here to review Frank's Form 1099-C.

Photo of Frank