Two 1099-S forms issued for rental home sale to legally separated spouses
We live apart, legally separated for 9 years. Last year, we sold a rental property jointly owned for 30 years. For simplicity’s sake, assume sales price = original purchase price. All assets (but 1) fully depreciated prior to year 20, when we filed MFJ. Capital gains equals zero, but Depreciation recapture equals 75% of sales price (basically the value of the building depreciated on the land).
For past 10 yrs, I filed Single, managed rental 100% & attached Schedule E on my returns. When I switched to Single status, I indicated I was 100% owner & the only active participant. His whereabouts were unknown for years. Both our names were on the mortgage, deed & past IRA returns, with his name first.
We each got a check at closing, so 2 1099-S forms were issued for equal amounts.
I’ve been trying to contact my ex, in order to file MFJ. Having both 1099-S forms makes the rental sale straightforward, and I offered to pay 100% of the tax bill due. We’d both benefit from the Schedule E & the higher tax bracket. I have no idea, but assume he has 0 income. Also not sure if he files taxes…. or owes back taxes.
If I file with Single status & half the appropriate numbers, I think I figured out what seems to be my accurate return for half of the sale & half the depreciation recapture. Aside from a note, is there a way to indicate the party responsible for the other half of the first 20 years of depreciation recapture? If I file Single, and he doesn’t file at all, the other half may never get paid. I want to ensure the IRS receives all the right numbers & full payment.
Filing an extension may help or complicate things further. If I file an extension with a Single status (& payment), could I later switch it to MFJ (after 4/18 deadline), and file jointly with him within 6 months? If he doesn’t file 2021 taxes & doesn’t file any extension, would we be able to file MFJ?
If he agrees prior to the tax filing deadline, can I file an extension (with payment) for us both (MFJ)?
These numbers are made-up. If I file a Single extension, I’d owe about $30K, using the full sale price of the house (with half the proceeds on just one Form 1099-S). With an MFJ extension, we’d owe less than $10K, and I’d pay it in full. If I file an MFJ extension and he owes current or back-taxes, would it or could it get applied to any of his potential debt? Could he then file single (0 income) & get a 10K refund? Or, I should I file a Single extension with half the numbers, since I received half the proceeds on a 1099-S….and somehow indicate he’s the other half owner…and send the IRS an enormous check for the temporary delay. Your advice is very much appreciated!
