Arizona Real Estate License Practice Exam

The correct form that must be filed with the IRS at the close of escrow is the 1099-S form. This form is specifically designed for reporting the sale or exchange of real estate. When a property is sold, the 1099-S serves to inform the IRS about the transaction to ensure that any necessary taxes are accounted for, particularly in regard to capital gains.

When a real estate transaction closes, the title company or settlement agent usually takes on the responsibility of preparing and filing the 1099-S. This form captures essential information, such as the seller's details, the gross proceeds of the sale, and other pertinent data related to the sale of the property.

The other forms mentioned serve different purposes. For instance, 1099 INT is for interest income, K-1 is used for reporting income, deductions, and credits from partnerships, and W-2 is for reporting wages paid to employees. Therefore, the 1099-S is the appropriate form for reporting real estate transactions at escrow closures, which is why it is the correct answer.