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Posted by Kirk Carpenter on March 28, 2007, 6:13 pm
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Would like to ask how to establish a sales price (for the
purpose of determining gain/loss) on a foreclosed property?
1099-C lists amount of debt cancelled as $50,000.00 and Fair
Market Value as $200,000.00. Thanks.
Kirk
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Posted by Kirk Carpenter on April 3, 2007, 7:42 pm
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> Would like to ask how to establish a sales price (for the
> purpose of determining gain/loss) on a foreclosed property?
> 1099-C lists amount of debt cancelled as $50,000.00 and Fair
> Market Value as $200,000.00. Thanks.
Anyone? Help please.
Kirk
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Posted by Stuart A. Bronstein on April 4, 2007, 2:39 pm
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> Would like to ask how to establish a sales price (for the
> purpose of determining gain/loss) on a foreclosed property?
> 1099-C lists amount of debt cancelled as $50,000.00 and Fair
> Market Value as $200,000.00. Thanks.
>
> Anyone? Help please.
Foreclosed properties are generally sold at an auction. The
lender generally bids the amount remaining on the loan and
that's often the highest bid. It doesn't mean that's the
value, however.
But if the property was foreclosed on, there really isn't
any cancellation of debt income, since you gave something in
exchange for it that should have had a basis higher than the
amount owed.
I'm not an expert on this, but it seems to me that you only
have gain if your basis was less than the amount left on the
loan, to the extent of the difference between those two
amounts. Or if the property is sold at auction for more
than what is owed to the bank, you may end up with money in
your pocket so there may be taxable income in that case.
You really need to talk to a local tax pro, who can properly
analyze your specific situation.
Stu
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Posted by Shyster1040 on April 5, 2007, 2:27 am
Please log in for more thread options Your amount realized (or, as you call it, "sales price") is
$200,000 - the fair market value of the property foreclosed
on - plus any cash you received. The $50,000 of debt
cancellation income reported to you on Form 1099-C is
handled separately and is not treated as part of the amount
realized on disposition of the property. See Treas. Reg.
1.1001-2.
See also the following IRS FAQ(skip the first paragraph and
start with the section headed "Why is it that I may have
both gain (or loss) and COD income upon foreclosure of my
house?":
http://www.irs.gov/faqs/faq4-4.html
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Posted by Seth Breidbart on April 9, 2007, 3:48 am
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> Your amount realized (or, as you call it, "sales price") is
> $200,000 - the fair market value of the property foreclosed
> on - plus any cash you received. The $50,000 of debt
> cancellation income reported to you on Form 1099-C is
> handled separately and is not treated as part of the amount
> realized on disposition of the property. See Treas. Reg.
> 1.1001-2.
I don't understand that.
He never *received* the $200,000, so why is that "realized"?
He *received* $50,000 worth of debt cancellation, plus any
cash actually received after the foreclosure.
> See also the following IRS FAQ(skip the first paragraph and
> start with the section headed "Why is it that I may have
> both gain (or loss) and COD income upon foreclosure of my
> house?":
> http://www.irs.gov/faqs/faq4-4.html
That says that if the FMV were _under_ $50,000, then the
difference between FMV and $50,000 is COD income; that isn't
the case here.
Seth
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
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<< Copyright (2006) - All rights reserved. >>
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