When there are multiple sellers, the settlement agent is required to request an allocation from the sellers as to how the 1099-S forms are to be filed. This allocation can be in the form of an input sheet. The request for allocation can be made anytime up to the close of the escrow transaction.
The request does not have to be in writing nor does the response have to be in writing.
The allocation between the multiple sellers can be accepted from only one of the sellers if it is complete and is not challenged by any other seller. However, the settlement agent should attempt to contact all sellers to verify the allocation. It is usually recommended that an amendment to the escrow be completed to specify an allocation between multiple sellers.
If no allocation is received or if an incomplete allocation is received, the settlement agent is required to report 100% of the gross proceeds to those sellers who do not submit an allocation or submit an incomplete allocation.
If conflicting allocations are received from multiple sellers, the settlement agent is required to report 100% of the gross proceeds to each seller.
It is permissible to receive an allocation from the sellers different than the ownership percentage. In addition, it is permissible to receive an allocation different from the allocation of the net proceeds. However, the settlement agent should obtain an amendment reflecting the different allocation.
In filling out the input sheet, multiple sellers should indicate their allocation percentage for reporting purposes. The percentages for the multiple sellers are required to add up to 100%. Otherwise, the settlement agent is required to allocate 100% of the gross proceeds to each of the sellers.
Husbands and wives are treated as one seller unless they choose to be treated separately. One of the spouses will choose to report the transaction under his or taxpayer identification number. If the husband and wife choose to report the transactions separately, they are required to submit an allocation as in the case of any other multiple seller situation. If their allocation does not add up to 100%, the settlement agent is required to allocate 100% of the gross proceeds to both the husband and the wife.
If the sale concerns a principal residence, the husband and the wife are required to complete separate certifications for the transaction to be exempt from reporting.
How to Fill Out the Input Sheet
Who is Subject to the Reporting Requirements
Which Transactions are Subject to the Reporting Requirement
Sales of Principal Residences
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