We Prepare Tax Returns!

We prepare most type of tax returns:


S Corporation.

C Corporation.




Gary Bode, CPA is a Master's Degreed, nation wide accountant offering tax and business services. Member of AICPA and NCACPA. Our virtual office provides excellent service to long distance and international clients. Call (910) 399-2705 for a free phone consult.

Client Video Testimonials

Click here to watch some of our clients in their video testimonials!

Client Testimonials

I became totally and permanently disabled after a working for 44 years. I returned to college late in life (while working full-time) to fulfill my dream of becoming an RN and at that time found it necessary to secure student loans. Three years after being declared totally and permanently disabled my student loans were discharged. In January 2013 we received a 1099-C form declaring said student loans that were discharged however that amount could be considered as income for 2012. This was a large amount of money and we live on two pensions and social security income.

I started looking on the internet for information regarding 1099-C and felt that this was something that we could not handle alone. I made phone calls locally to a very reputable tax group in a city near us and they said it would cost $500 for an appointment and that they really prefer to do corporate taxes and they referred me to a local person who had worked for them at one time, we called and explained the situation and an appointment was made and then the comment was made that "I will have to do some research on this" and flags immediately went up and we called back and cancelled that appointment. I had been researching the IRSwebsite and every place else I could think of and I was not comfortable doing our own taxes this year. We called another local tax preparer that we had used in the past and made an appointment, however prior to the appointment, while still seeking information regarding our situation,

I came across a website for Gary l. Bode, MSA, CPA, PC in Wilmington, NC. I called Mr. Bodeand explained our situation and asked if he could help. He spoke very knowledgeably regarding the situation and stated that yes; he felt he could help us. As Mr. Bode was in North Carolina and we were in New York I scanned all of our documents including back-up documents for all of our claims and forwarded all to him. Mr. Bode kept in touch with us via email; we have spoken on the telephone several times and have become very comfortable with his knowledge and professionalism. Also, as I am a true "worrier" I have continued looking into information regarding our tax situation and I came upon another web page for Mr. Bode that included testimonials which spoke of his experience with this type of tax situation as it became prevalent during the recession. This reinforced in our minds that we had made the right decision in hiring this person as our tax preparer.

I share all of this as our taxes are now ready to be filed (we do owe tax for 2012 but not the astronomical figure we thought we were facing), and we are confident that they have been prepared with the utmost care by a gentleman who has an excellent working knowledge of the situation we faced and the tax laws that were applicable to said situation.


Bill and Carol

Free Consult

Even though Gary enjoys helping colleagues, we no longer provide free consults to other tax preparers. He's happy to consult on an hourly billing basis if our schedule allows.

Pay Your CPA

Enter $ Below
Other Amount:
Your Email Address:

Insolvency CPA discusses Form 1099-C, Form 1099-A, Form 1099-S, Form 982, Form 8825, Form 4797 and Rental Property Short Sales

insolvency CPA and Form 1099-S

Gary Bode, CPA: tax complications just make the short sale experience worse. (910) 399-2705.

Insolvency CPAs deal with lots of short sales. Cancelled debt is a huge topic and I’ll only deal with short sales of investment or rental property in this post. If you received Form 1099-C for a short sale on your primary residence, you automatically qualify to exclude the cancelled debt from taxable income. This is simplest application of Form 982 and most folks handle it themselves. I’ll cover:

  • Basics of cancelled debt.
  • Form 1099-C. Cancelled Debt.
  • Form 1099-A.
  • Form 1099-S. Real estate sale.
  • Insolvency on Form 982.
  • Form 4797 to report the short sale.

Typical Sequence of Short Sales of Rental Property resulting in Cancelled Debt and Form 1099-C or Form 1099-A

  • You or your company sells a rental property for less than the remaining mortgage balance. Perhaps to avoid foreclosure.
  • Scenario A: The lender cancels the remaining balance of the loan. So, the amount of cancelled debt is the mortgage remaining balance less the short sale amount.
  • Scenario B: The lender issues Form 1099-A. It means you have report the short sale to the IRS and calculate Capital Gain/Loss.
  • Scenario C: You receive both Form 1099-C and Form 1099-A. If you exclude cancelled debt from taxable income using Form 982, it affects the basis of the short sold property. The taxable attributes section of Form 982 is tricky.
  • The broker for the short sale sends you and the IRS a Form 1099-S showing the short sale’s price and date. This overlaps Form 1099-A. But the IRS sometimes asks about the Form 1099-S if it isn’t specifically addressed in the tax return. Best to anticipate a Form 1099-S. Ask the borker about it if you don’t receive it.
  • The lender sends you and the IRS a Form 1099-C reporting the date and amount of cancelled debt.
  • Your insolvency CPA prepares the last Form 8825 for the partial rental year.
  • Your insolvency CPA excludes cancelled debt from Form 1099-C from taxable income using Form 982.
  • Your insolvency CPA calculates the capital gain or loss on the short sale. But using Form 982 and insolvency changes the basis of short sold property. This is the tax attributes part of Form 982 that causes so much confusion.

Can you deal with Form 1099-C, Form 1099-A, Form 1099-S, and Form 8825 Yourself?

Sure. If you get uncomfortable during self-preparation consider giving us a call. Form 982 is complex with large potential tax consequences. Our virtual office makes it easy to deal with us. We practice in all States except HI.

The Two Main Tax Issues

Cancelled Debt becomes Taxable Income: Exclusion via Insolvency using Form 982 with Form 1040 Form 1065, Form 1120-S or Form 1120

  • Form 982 is just another tax form included with the parent return; Form 1040, Form 1120, Form 1120-S, Form 1065.
  • The amount of cancelled debt on Form 1099-C becomes taxable income unless you can exclude it through Form 982.
  • IRS insolvency is one way a Form 982 CPA excludes the cancelled debt from taxable income.
  • Insolvency doesn’t mean bankruptcy. As always the IRS has a special definition; insolvency includes assets, liabilities and timelines.
  • The cancelled debt show up as income in the parent return and the Form 982 calculation gets deducted later in the parent return.
  • Short sales and Form 982 became a CPA specialty during the recession.
  • Insolvency is just one technique used on Form 982.

Capital Gain or Loss on the rental property short sale

  • With short sales involving Form 1099-A or Form 1099-C, the capital gain or loss  calculation appears on Form 4797.
  • Typical capital gain calculation when using Form 4797? Capital gain is a positive number: (amount shown on Form 1099-S) less (the original purchase price) plus (accumulated depreciation). Accumulated Depreciation traps some folks even though it seems they lost money on the short sale.
  • Here’s the tricky part of Form 982. The IRS adjusts the “tax attributes” of your remaining assets. This lowers the basis of the rental property therefore increasing the Capital Gain.

Our Virtual Office allows us to handle all the above issues, regardless of where you live or where the rental property is located.

I’m a rental property CPA that has rental property in my extended family. So I stay aware of emerging issues on Form 8825 and Schedule E . Read some of my Form 8825, Form 1099-C, Form 1099-A, Form 982 and/or cancelled debt posts to judge my experience for yourself. For a free phone consult please call (910) 399-2705.

Find me on Google+

Leave a Reply

You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>