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IRS Audits

Chapter 6. Payer Compliance

Section 2. Information Returns and Information Reporting (Cont. 4)

4.6.2  Information Returns and Information Reporting (Cont. 4)

4.6.2.15 
Form 1099-S, Proceeds from Real Estate Transactions

4.6.2.15.5 
Reporting Requirements

4.6.2.15.5.2  (08-01-2002)
Multiple Transferors

  1. Filers must use a separate Form 1099-S to report the proceeds for each transferor when there are multiple transferors.

  2. Filers must request an allocation from each transferor and report each persons allocated proceeds accordingly.

  3. Filers must report the total unallocated gross proceeds on each transferor's form if no allocation or an incomplete allocation is received.

4.6.2.15.5.2.1  (08-01-2002)
Husband/Wife

  1. If the transferors were husband and wife at the time of closing, who held the property as joint tenants, tenants by the entirety, tenants in common, or as community property, treat them as a single transferor. Only one Form 1099-S showing either of them as the transferor is required.

  2. If they provide an uncontested allocation of gross proceeds, Form 1099-S should be filed for each spouse accordingly.

4.6.2.15.5.2.2  (08-01-2002)
Partnerships

  1. Property transferred by partnerships requires only one Form 1099-S. Filers must show the name and Employer Identification Number (EIN) of the partnership, not the individual partners.

4.6.2.15.6  (08-01-2002)
References

  1. IRC section 6045(e).

  2. Regulation 1.6045-4.

  3. Rev. Proc. 98-20.

  4. Notice 93-4.

  5. Instructions for Forms 1098, 1099, 5498 and W-2G.

  6. Publication 515.

4.6.2.16  (08-01-2002)
Form 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc./Form 5498, IRA Contribution Information

  1. This part of Section 2 covers the types of distributions from pension plans and Individual Retirement Arrangements/Accounts (IRAs) which must be reported on Form 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.

  2. This chapter also contains the filing requirements for Form 5498, IRA Contribution Information.

4.6.2.16.1  (08-01-2002)
General Information

  1. Payers/trustees use Form 1099-R to report designated distributions of $10 or more from profit-sharing or retirement plans, any IRAs, annuities, pensions, insurance contracts, survivor income benefit plans, permanent and total disability under life insurance contracts, charitable gift annuities, etc.

  2. Payments made to military retirees are reported on Form 1099-R. If amounts paid under military retirement are awarded to a former spouse, the Form 1099-R is filed listing the former spouse's name and taxpayer identification number (TIN).

  3. Nonqualified plan distributions are reported on Form W-2, Wage and Tax Statement.

  4. Amounts totally exempt from tax are not reported on Form 1099-R. These include amounts paid by worker's compensation plans and the Department of Veterans Affairs.

4.6.2.16.1.1  (08-01-2002)
Types of Distributions Reported

  1. Various information is reported for different types of distribution.

    1. The most common dollar values reported are the gross distribution (Box 1); the taxable amount (Box 2a); Federal income tax withheld (Box 4); and employee after-tax contributions (Box 5).

    2. Other information, which may be reported, includes amounts eligible for capital gain election (Box 3); any net unrealized appreciation in employer's securities (Box 6); the current actuarial value of an annuity contract (Box 8); and the payee's percentage of the total distribution (Box 9).

     

  2. Each distribution reported on Form 1099-R is characterized by one or two distribution codes which are reported in Box 7 of Form 1099-R. These distribution codes are as follows:

    1. Code 1 - Early distribution, no known exception

    2. Code 2 - Early distribution, exception applies (as defined in IRC section 72(q), (t), or (v))

    3. Code 3 - Disability

    4. Code 4 - Death

    5. Code 5 - Prohibited transaction

    6. Code 6 - IRC section 1035 exchange

    7. Code 7 - Normal distribution

    8. Code 8 - Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in the current year

    9. Code 9 - PS 58 costs

    10. Code A - May be eligible for 5 or 10 year tax option

    11. Code D - Excess contributions plus earnings/excess deferrals taxable in the current year less two years

    12. Code E - Excess