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Short sale personal residence in 2015 after divorce 2012

October 16, 2016 • Marco Ahtirski • Log In to Post Comments

House was purchased in 11/1999 as married and both were living in the house until 2012 when he moved out filing status married filing seperate due to divorce, divorce became final in 2013, spouse remained in the house and paid the mtge.payment until 2014, May 14/ 2015 house was sold reported on 1099 S for $450,000  under both names, wife received a 1099 C for debt cancellation under her SSN only for $111.898 in box 2 in box 7 - $422,870 date 5/15/2015, which appears to correct re original mtge difference. How to report and for whom? What about section 121 Home exclusion. If in the divorce agreement house was transferred to her, than she would have to report only on her tax return as 100% since the loan was original in both names and it was never refinanced after the divorce.

Thank you

Marco


Comments

t would seem that the debt would be split of both names are on the house and both were discharged. See Jensen v. Comm., TCM 2010-77. As far as the 121 exclusion if the original debt was not refinanced (before or after the divorce), 121 would apply. If both names were on the house at the sale, it would be split.

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