By what date must the bank send the borrower a statement in connection with an information return on foreclosed or abandoned property?
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A. B. C. D.B
Under the US Internal Revenue Code, lenders or financial institutions that foreclose on a borrower's property or accept a deed in lieu of foreclosure are required to file an information return with the IRS, known as Form 1099-A, Acquisition or Abandonment of Secured Property. The purpose of this form is to report to the IRS and the borrower the fair market value (FMV) of the property at the time of foreclosure or abandonment, which may have tax implications for the borrower.
In addition to filing Form 1099-A with the IRS, the bank must also send a copy of the form to the borrower. The question asks when this statement must be sent to the borrower.
The answer to this question is A. January 15 of the year following the year of the foreclosure or abandonment. This date is specified in the US Internal Revenue Code, specifically in section 6050J.
According to this section, if a lender forecloses on a borrower's property or accepts a deed in lieu of foreclosure, the lender must file Form 1099-A with the IRS and send a statement to the borrower by January 15 of the year following the year of the foreclosure or abandonment.
It's important to note that this deadline only applies to the statement sent to the borrower; the deadline for filing Form 1099-A with the IRS may be different. The lender may have until February 28 (or March 31 if filing electronically) to file Form 1099-A with the IRS, depending on the filing method used.
In summary, when a bank forecloses on a borrower's property or accepts a deed in lieu of foreclosure, they must file Form 1099-A with the IRS and send a statement to the borrower by January 15 of the year following the foreclosure or abandonment.