1098 Reporting - Loan in Non-Accrual Status

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Question:

If a loan is in non-accrual status and they make a payment, everything will go to principal. How should this be reported on a 1098?

Answer:

The bank placing the loan in non-accrual is an internal accounting issue and does not impact the loan contract. The bank should be running separate calculations for tax reporting for IRS purposes for the taxpayer.

First published on BankersOnline.com 6/30/08