2003 HTML Instructions for Form 1098,

This is archived information that pertains only to the 2003 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

Table of Contents

Items To Note

IF an obligation is...	THEN...
Incurred after 1987	It is a mortgage if real property that is located inside or outside the United States secures all or part of the obligation. ¹
Incurred after 1984 but before 1988	It is a mortgage only if secured primarily by real property.
In existence on December 31, 1984	It is not a mortgage if, at the time the obligation was incurred, the interest recipient reasonably classified the obligation as other than a mortgage, real property loan, real estate loan, or other similar type of obligation. ²
¹ This applies even though the interest recipient classifies the obligation as other than a mortgage, for example, as a commercial loan.
² For example, if an obligation incurred in 1983 was secured by real property, but the interest recipient reasonably classified the obligation as a commercial loan because the proceeds were used to finance the borrower's business, the obligation is not considered a mortgage and reporting is not required. However, it is not reasonable to classify those obligations as other than mortgages for reporting purposes if over half the obligations in a class established by the interest recipient are primarily secured by real property.

Items To Note

In addition to these specific instructions, you should also use the 2004 General Instructions for Forms 1099, 1098, 5498, and W-2G. Those general instructions include information about:

Backup withholding
Magnetic media and electronic reporting requirements
Penalties
Who must file (nominee/middleman)
When and where to file
Taxpayer identification numbers
Statements to recipients
Corrected and void returns
Other general topics

You can get the general instructions from the IRS website at www.irs.gov or by calling 1-800-TAX-FORM (1-800-829-3676).

Rule of 78s method of accounting. The discussion on the Rule of 78s has been removed from these instructions. If loans that were issued before 1999 were extended, you may continue to use this method of calculating interest received. For more information on the Rule of 78s, see Regulations section 1.6050H-2(c) and section 5.04 of the Appendix in Revenue Procedure 2002-9, 2002-1 C.B. 327 (and its successor).

Instructions for Form 1098 - Introductory Material