Acquisition or Abandonment of Secured Property If you borrow money from a lender to purchase property, the lender may require the loan to be secured by the purchased property. If you transfer the ownership of the secured property to the lender (such as in a foreclosure) or abandon the property, the law may require you to treat the transfer or the abandonment as a sale of the property. If the lender acquires the secured property from you or has reason to know that you abandoned or stopped using the secured property, the lender should send you a Form 1099-A, Acquisition or Abandonment of Secured Property. On Form 1099-A, the lender reports the amount of the debt owed (principal only) and the fair market value (FMV) of the secured property as of the date of the acquisition or abandonment of the property. You, the debtor, use the amount realized to determine a gain or loss on the disposition of the property and report the gain or loss on Schedule D (Form 1040), Capital Gains and Losses or Form 8949, Sales and Other Dispositions of Capital Assets if the property isn't used for business, or on Form 4797, Sales of Business Property if the property is used for business. If your property was subject to a debt for which you're personally liable (recourse debt), your amount realized is the FMV of the property. If your property was subject to a debt for which you're not personally liable (nonrecourse debt), your amount realized is the entire amount of the nonrecourse debt plus the amount of cash and the FMV of any property you received. For more information, including information about the tax year in which you have an amount realized, refer to Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals) and Publication 544, Sales and Other Dispositions of Assets. Cancellation of Debt When you borrow money, you don't include the loan proceeds in gross income because you have an obligation to repay the lender later. If the lender subsequently cancels that obligation, you may be required to include the amount of the canceled debt in gross income. A commercial lender canceling a debt will issue a Form 1099-C, Cancellation of Debt to report the cancellation. On Form 1099-C, the lender reports the amount of the canceled debt. If the lender's acquisition of the secured property (or the debtor's abandonment of the property) and the cancellation of the debt occur in the same calendar year, the lender may issue a Form 1099-C only. See Topic No. 431 for additional information on Form 1099-C. Incorrect Information If you receive a Form 1099-A or Form 1099-C containing incorrect information, contact the lender to make corrections. Excluding Canceled Debt from Income In certain situations, you may exclude cancellation of debt income in whole or in part. For additional information, refer to Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals) PDF, Topic No. 431, Canceled Debt – Is it Taxable or Not? and Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) PDF. Refer to Do I Have Cancellation of Debt Income on My Personal Residence? to determine if any of the debt canceled on your principal residence is required to be included as income on your federal tax return. Also see Revenue Procedure 2020-11 PDF and IR-2020-11 for relief to students with discharged student loans and their creditors.