Why it matters
The form is the record of a sale that may produce a capital gain, a loss or a reportable transaction. The client still needs the purchase records, the improvements and the selling costs to calculate the basis and the gain.
Example
A client sells a rental property. The closing agent issues Form 1099-S, and the preparer uses it with the closing statement and the depreciation records to report the sale.
Related terms
Questions about Form 1099-S
Does Form 1099-S mean the sale is taxable?
The form reports the sale, not the tax result. The taxpayer may qualify for an exclusion, such as the home sale exclusion, or may have a gain or loss to report.
What records does the client need with Form 1099-S?
The purchase closing statement, the improvement records, the selling costs and any depreciation taken. Those records establish the basis and the gain.