Presented by: David L. Rice, Esq. For CalCPA Pasadena Discussion Group. (c) David L. Rice

Save this PDF as:
 WORD  PNG  TXT  JPG

Size: px
Start display at page:

Download "Presented by: David L. Rice, Esq. For CalCPA Pasadena Discussion Group. (c) David L. Rice"

Transcription

1 Presented by: David L. Rice, Esq. For CalCPA Pasadena Discussion Group 1

2 Mortgage defaults and foreclosures are of a national concern. In 2011, nearly 5,000,000 borrowers are behind on their mortgage could rival 2010 in the number of foreclosures. Many foreclosures have been delayed due to banks having paused as a result of questionable practices. The government entered into a settlement program, but it really won t affect that many borrowers from a percentage standpoint. In 2010, 1 in every 45 households received a notice of foreclosure filing. More than 50% of the foreclosures came from five states and California was one of them. 2

3 If a home is foreclosed upon, the home owner is treated as having sold the home. From the borrower s perspective a foreclosure, deed in lieu of foreclosure or short sale generally has the same income tax consequences from an income standpoint; however, the types of income recognition can differ. A foreclosure generally creates gain or loss for the home owner and potentially cancellation of indebtedness income (CODI). Different rules apply if a debt is discharged and the borrower does not dispose of the home. 3

4 With a nonrecourse loan, the home owner is treated as selling the home for the outstanding debt in a foreclosure. In other words, no cancellation of indebtedness income (CODI) will result even if the outstanding debt exceeds the fair market value of the home, even if there is a short sale. See The home owner simply will recognize gain or loss based on the home owner s tax basis (generally purchase cost, plus cost of improvements) in the home. 4

5 Recourse Debt This is debt for which the taxpayer is personally liable. In the event of a default, the lender can look beyond the collateral pledged for the loan and hold the borrower accountable for the unpaid balance. The lender generally can satisfy the loan with personal bank accounts and other assets of the borrower. Whether debt is recourse or not varies upon state law and the loan documents Non-Recourse debt This is debt where the lender can only look to the loan collateral in the event the taxpayers default on the loan. In California the one action rule as discussed later should not affect the determination whether the debt is recourse or nonrecourse. 5

6 For example, assume the home owner has a nonrecourse mortgage with an outstanding balance of $250,000, has an adjusted basis of $100,000 and a FMV of $200,000. If the lender forecloses on the home, the home owner would have a taxable gain of $150,000. The home owner could exclude gain of up to $500,000 for a joint return under a principal residence gain exclusion in IRC Section 121, assuming the home owner satisfied the other requirements of that provision. Amount Realized $250,000 Less: Basis $100,000 Gain Realized $150,000 No Gain recognized if IRC Section 121 is applicable. 6

7 Assume in example 1, above, that the outstanding loan was $250,000, the adjusted basis was $300,000 and the FMV was $200,000. The property will be treated as sold for $250,000, the outstanding debt. The home owner will have a nondeductible loss of $50,000 since the home is a personal use asset. The FMV of the home is irrelevant in determining the income tax consequences. See Treas. Reg. Sections (b) and (a)(1) and (a)(4)(i). 7

8 In this case, the home owner can simply walk away from the loan. The lender issues the taxpayer Form 1099-A, Acquisition or Abandonment of Secured Property. The taxpayer reports the foreclosure on a Form 1040, Schedule D. The taxpayer cannot deduct a loss on the home to offset any income because the loss is from a personal use asset. The home owner does not file a Form 982 because there has been no CODI. 8

9 If the underlying loan or loans on the property are recourse, then the tax consequences differ dramatically. Most importantly, if the FMV of the property is less than the outstanding debt, the amount treated as paid to the home owner includes that debt only up to the FMV of the property. See. Treas. Reg. Section (a)(2) and IRS Pub Nos. 544 & The balance of the outstanding debt generally is CODI. 9

10 Assume the same facts as in example 2 above, (slide 7), if the underlying loan is recourse, the borrower would have CODI of $50,000, the difference between the FMV of the property ($250,000) and the loan balance on the property ($300,000), assuming no exceptions apply. The home is then considered as sold for the remaining $250,000 debt. This results in a $50,000 loss that the taxpayer cannot recognize due to the home being a personal use asset. Amount Realized: $250,000 Less: Basis $300,000 Loss: ($ 50,000) Absent an exclusion, the CODI of $50,000 should be reported by the lender to the home owner on Form 1099-C. However, caution should be advised as the Taxpayers Advocate Office has reported that taxpayers are receiving incorrect 1099-Cs and lenders resist correcting the problem. 10

11 In California, if the underlying debt was for a purchase money obligation, then it is nonrecourse. A purchase money obligation means that either: Credit was extended to the buyer by the seller to finance the purchase of property and which is secured by the property; or Funds which were loaned to the buyer by a third party if those funds were used to pay all or a part of the purchase price and the loan is secured by a dwelling of four units or less occupied in part by the borrower as his personal residence. 11

12 Any other type of debt in California except as enumerated above is recourse debt (unless the loan specifically provides otherwise). As an example, if a home owner refinances his or her home, the debt becomes recourse debt. Home equity loans taken out after the purchase of a home are considered recourse debt. 12

13 The primary method of foreclosure in California is through a nonjudicial foreclosure sale. The lender waives its right to a deficiency judgment. See California Tax Lawyer, Does a Nonjudicial Foreclosure Convert Debt from Nonrecourse to Recourse (Winter 2011). Under this method a foreclosure sale proceeds pursuant to a power-of-sale contained in a deed of trust. There are very stringent procedures to be followed and any creditor who completes a foreclosure through nonjudicial means is barred from recovering a deficiency judgment against the debtor, regardless of whether the loan is recourse or nonrecourse. CCP Section 580d. However, just because the lender is barred against coming after the debtor, does NOT turn a recourse loan into a nonrecourse loan for tax purposes. 13

14 In the case of recourse loans, lenders can forego their rights under the power of sale in a deed of trust and file a lawsuit in a judicial foreclosure proceeding. If the creditor prevails, the court will grant a judgment of foreclosure and will direct the sale of the encumbered property and the application of the proceeds to payment of the creditor s costs and indebtedness and the creditor can apply within three months for a deficiency judgment. Upon such application, and establishment of a deficiency, the court will render a money judgment against the debtor for the amount of the deficiency. CCP Section 580a. Remember this procedure does not apply to nonrecourse loans as described above. 14

15 IRC Section 61(a)(12) provides that gross income includes income from the discharge of indebtedness (CODI), which is taxed as ordinary income. Fortunately IRC Section 108 has a exceptions: IRC Section 108(a) generally provides for the following exceptions: Mortgage Forgiveness Debt Relief Act of Bankruptcy Insolvency IRC Section 108(e) generally provides for the following exceptions: Accrued, but unpaid interest which is paid would create a deduction Purchase price reduction between buyer and seller for seller financing 15

16 The Mortgage Forgiveness Debt Relief Act of 2007 (Mortgage Relief Act), extended by the Emergency Economic Stabilization Act of 2008 may save the day for a number of home owners. This section added IRC Section 108(a)(1)(E) which excludes from gross income qualified principal residence indebtedness discharged after 2006 and before January 1, This section is somewhat complex as there are a number of definitional terms as set forth in the following slides. 16

17 Qualified Principal Residence Indebtedness is acquisition indebtedness as defined in the home interest deduction rules of IRC Section 163(h)(3)(B), except that total indebtedness is limited to $2,000,000 and not $1,000,000. Under that provision, acquisition indebtedness is indebtedness incurred in acquiring, constructing, or substantially improving any qualified residence and secured by the residence. It also includes refinanced indebtedness if it does not exceed the original acquisition indebtedness. If a refinancing exceeds the original acquisition indebtedness and was used to construct or substantially improve the residence, it too would qualify as would a home equity loan used for such purposes. 17

18 The term principal residence has the same meaning that it has under the principal residence gain exclusion rules of IRC Section 121. For the residence to qualify as a personal residence, the taxpayer must own and use the residence for at least two out of the five years preceding the sale by the taxpayer. There are a number of other exceptions which should be fully examined. The total amount of principal residence indebtedness that qualifies for relief is $2,000,000. The Act only applies to debt forgive in calendar years 2007 through The Act does not apply to debts forgiven on second homes, income rental property or commercial property. Must reduce basis by the amount of income excluded This Act was part of Obama s budget to extend to 2014 and perhaps beyond. 18

19 There is no limit on the amount of relief if the debt is reduced as part of a purchase price reduction of seller financing with the original seller as provided under IRC Section 108(e)(5). Third party lenders do not count. In this instance, a borrower just reduces his or her tax basis in the property by the amount of the debt reduction. This section applies to all types of property and not just personal residences. The exception does not apply in a title 11 bankruptcy or if the borrower is insolvent. 19

20 California Conformity California only had a modified version of this law, which originally applied only to CODI resulting from foreclosures or short sales in 2007 and 2008 and limited the exclusion to $1,000,000 and not the $2,000,000 as provided for by Federal Law. In April of 2010 the law was extended and applies to all foreclosures or short sales from 2009 to December 31, 2012 and limits the exclusion as follows: $2,000,000 for taxpayers who file as married filing jointly, single, head of household or widow/widower and $1,000,000 for taxpayers who are married filing separately. 20

21 You can form 540 or 540NR. If the amount of debt relief purposes is the same as or less than California limit, then no adjustment on the 540/540NR is necessary. If the amount of debt relief for federal purposes is more than the California limit, include the amount in excess of the California limit on Schedule CA line 21f. Include the Federal Return and Form 982 with the California return. 21

22 Ted and Alice, are a married couple who purchased a home in the Inland Empire in 2005 for $450,000. They refinanced the home a year later for $450,000. In 2010, they both lost their jobs and the lender foreclosed on the home, which is their principal residence. At the time of the foreclosure the home had a FMV of $250,000. Because the mortgage was recourse financing, the couple would have CODI of $200,000 ($450,000-$250,000). However, since it was all acquisition indebtedness, it is excluded under the Mortgage Relief Act provisions. To properly report the excluded CODI, Ted and Alice should file IRS Form 982 with their income tax return, IRS Form On the IRS Form 982, they should check the box on line 1e, report the $200,000 of CODI on line 2, and report $200,000 of basis reduction on line 10b. 22

23 Assume the same facts in the prior example, except that in 2006 they refinanced the property for $500,000 and spent the cash out on the loan of $50,000 on a gambling trip to Vegas in which the house (not theirs) won. Assume that the FMV of the home at the time of the foreclosure was $300,000. In this example the couple would have $50,000 (Original loan was $450,000 all of which constituted acquisition indebtedness) that would not be excluded under the Home Debt Relief provision and unless one of the following exclusions applied, they would have CODI: Ted and Alice are either insolvent or bankrupt at the time that the debt is no longer owed, which in California is at the time of the non-judicial foreclosure. However, the taxpayer may have to reduce certain tax attributes (NOLs, and capital loss carryovers, tax credit carryovers, basis of property, etc.) Insolvency for CODI purposes means that liabilities exceed assets which is measured at the time of discharge. Exempt assets may count as well as contingent liabilities. The valuation of assets is an issue. 23

24 Assume Ted and Alice have a basis in their principal residence of $10 million, a FMV of $5 million and a loan balance of $9 million nonrecourse. Assume Ted and Alice default on the loan. The amount realized on a nonrecourse loan is equal to the FMV of the property. Thus the amount realized is $9,000,000 resulting in a loss of $1,000,000 all of which is non-deductible because it is deemed a personal loan. 24

25 However assume that the loan is recourse and that Ted and Alice default and the lender allows them to do a short sale for $5 million. The amount realized from the sale would be $5,000,000 Ted and Alice will have $4 million of CODI ($9,000,000 - $5,000,000). Of this amount $2 million would be excluded under the Mortgage Relief Act provisions, resulting in $2 million of CODI. The basis of the property would also be reduced by $2,000,000 as a result of the $2,000,000 exclusion above, resulting in a $8,000,000 basis. Thus the couple would have a $3,000,000 non-deductible loss. 25

26 Assume that Ted and Alice have a nonrecourse acquisition indebtedness loan and a home equity loan against their principal residence. Assume that their basis is $400,000 (original cost), FMV of $300,000 and a home equity line of $150,000, and acquisition indebtedness of $350,000 with the primary lender. Assume the primary lender cancels $50,000 of debt and the equity line cancels $100,000 of debt. If Ted an Alice keep the home, they will recognize $100,000 of CODI from the reduction of the equity line of debt. $50,000 will be excluded from taxable income under the Mortgage Relief Act. 26

27 Assume the same example above, but that both loans are nonrecourse and the lender forecloses on the home. Ted and Alice will have a gain of $100,000 since the outstanding debt is $500,000 and their tax basis is $400,000. The gain generally could be excluded under the principal residence gain exclusion provisions of IRC Section 121. Even if Ted and Alice paid tax on the gain, it generally should be taxed as preferential long-term capital gains rates. 27

28 Assume that the loans are recourse and the lenders allow Ted and Alice to do a short sale at the FMV of $300,000. Ted and Alice will have $100,000 of CODI on the acquisition debt discharge, which will be excluded by reason of the Mortgage Debt Relief Act provisions and $150,000 of CODI from the discharge of the home equity debt, none of which will be excluded under that provision, but may be excludible under other CODI exceptions. 28

29 Ted and Alice purchase a home for $600,000 in cash. Later, Ted and Alice borrow $500,000 on the home equity when the home had a FMV of $700,000. The FMV of the house is currently $400,000. If the lender agrees to reduce the loan by $100,000, Alice and Ted will have $100,000 of CODI. On the other hand what happens if the house is sold? Because the loan is recourse, the amount realized on recourse debt is equal to the FMV of the property. Thus the amount realized is $400,000 resulting in a $200,000 non-deductible loss. However, the recourse note was for $500,000 resulting in CODI in the amount of $100,000 all of which is excluded under the Debt Relief Act of 2007 (note the expiration of 12/31/2012). 29

30 If the loan was nonrecourse, then the taxpayers would even be better off. The amount realized on a nonrecourse loan would be $500,000 (the amount of the loan). Since their basis was $600,000 the taxpayers would have a nondeductible loss of $100,000 but there would be no CODI. 30

31 During the past few years there have been a number of cases where the parents are solely on title and on the loan documents but the children purchased the home. Who takes the potential tax hit? In general, a taxpayer my deduct interest or taxes providing he is the one who owes the debt and he makes the payment. In other words the obligation to pay the taxes or interest must fall on the taxpayer. See Treas. Regs. Sections

32 However, from a tax standpoint, the courts look to the equitable an beneficial ownership as opposed to just legal ownership. Where is the economic effect? The court would look to such items as rights to possession, obtaining full ownership on full payment, who pays the property taxes, who insures the property and who maintains the property. For example, Mom and Dad purchase a home in their name with the intent that it really belongs to their son. The son lives in the residence and makes all the mortgage payments and pays for all other expenses including property taxes. 32

33 Although Mom is the legal owner, the son is the equitable and beneficial owner and is entitled to the deductions. See Safet and Ana Uslu vs. Comm r, T.C. Memo ; Adams vs. Comm r, T.C. Memo and Njenge vs. Comm r, T.C. Summary Opinion ; and Paul Trans and Thuy Bich Dang vs. Comm r, T.C. Memo

34 David L. Rice, Esq. Professor of Accounting David Lee Rice, APLC Cal Poly Pomona 2780 Skypark Drive College of Business Admin. Suite West Temple Avenue Torrance, CA Pomona, CA Telephone: Telephone

Mortgage Forgiveness Debt Relief Act. Cancellation of Debt (COD) Income. Recourse Loan 10/6/2014. Consequences of the expiration of the act

Mortgage Forgiveness Debt Relief Act. Cancellation of Debt (COD) Income. Recourse Loan 10/6/2014. Consequences of the expiration of the act Mortgage Forgiveness Debt Relief Act Consequences of the expiration of the act Cancellation of Debt (COD) Income When a loan is forgiven without being paid back, COD Income is created. That amount is included

More information

Is Cancellation of Debt Income Taxable? One question that I am asked often these days is whether cancellation of debt (COD) income is taxable or not?

Is Cancellation of Debt Income Taxable? One question that I am asked often these days is whether cancellation of debt (COD) income is taxable or not? Is Cancellation of Debt Income Taxable? One question that I am asked often these days is whether cancellation of debt (COD) income is taxable or not? For tax purposes, the general rule is that all debt

More information

Common Foreclosure and Cancellation of Debt Issues for Real Property (edited transcript)

Common Foreclosure and Cancellation of Debt Issues for Real Property (edited transcript) Common Foreclosure and Cancellation of Debt Issues for Real Property (edited transcript) Yvonne McDuffie-Williams: Thank you. As he said, my name is Yvonne McDuffie-Williams. I am a senior program analyst

More information

Taxpayers. What You Should Know. I Found My Voice At The IRS

Taxpayers. What You Should Know. I Found My Voice At The IRS Cancellation Advocating of Debt for Taxpayers What You Should Know I Found My Voice At The IRS National Taxpayer Advocate Podcast Current Law IRS Office of Chief Counsel Cancellation of Debt Section 61(a)(12)

More information

Page 1 of 9 Home > Legal > Tax Folder > Taxation of Foreclosures and Short Sales Taxation of Foreclosures and Short Sales find the article at: "http://www.car.org/legal/taxfolder/taxation-foreclosures-shortsales/"

More information

Copyright 2009-2010 LA First Tax & Financial Services. All Rights Reserved.

Copyright 2009-2010 LA First Tax & Financial Services. All Rights Reserved. Cancellation of Debt Important Terms Foreclosure/ Repossession Forms 1099- A or C Non-recourse Debt Recourse Debt Debt Discharge Income (DDI) Insolvency IRS Tax Provisions Tax Provisions Involved: Emergency

More information

DISCHARGE OF INDEBTEDNESS INCOME PLANNING OPPORTUNITIES

DISCHARGE OF INDEBTEDNESS INCOME PLANNING OPPORTUNITIES DISCHARGE OF INDEBTEDNESS INCOME PLANNING OPPORTUNITIES Thomas Mammarella Gordon, Fournaris & Mammarella, P.A. 1925 Lovering Avenue Wilmington, DE 19806 Tel: (302) 652-2900 Fax: (302) 652-1142 tmammarella@gfmlaw.com

More information

Transcript for Canceled Debt (Tax Consequences)

Transcript for Canceled Debt (Tax Consequences) Transcript for Canceled Debt (Tax Consequences) Hello. I m Jean Wetzler, with a reenactment of a March 2009 IRS National Phone Forum on the Tax Consequences of Canceled Debt. The presenter for the phone

More information

Cancellation of Debt

Cancellation of Debt Cancellation of Debt ROBERT E. MCKENZIE Arnstein & Lehr LLP Arnstein & Lehr LLP 1 Debt Cancellation If a debt is canceled or forgiven, other than as a gift or bequest, the debtor generally must include

More information

Tax Relief for Businesses in Distress American Bar Association Section of Taxation

Tax Relief for Businesses in Distress American Bar Association Section of Taxation Tax Relief for Businesses in Distress American Bar Association Section of Taxation 5-Year Carryback of 2008 and 2009 Net Operating Losses (NOLs) for Eligible Small Businesses (ESBs) For 2008 and 2009,

More information

Cancellation of Debt A Special Focus on Home Foreclosures

Cancellation of Debt A Special Focus on Home Foreclosures Cancellation of Debt A Special Focus on Home Foreclosures Mary M. Gillum, Coordinator and Attorney Tennessee Taxpayer Project Legal Aid Society of Middle Tennessee and the Cumberlands (Graphics from Microsoft

More information

Continuing Professional Education

Continuing Professional Education Continuing Professional Education Course Number CPE20908 Revision Date: 11/15/2008 Debt Relief Income & Insolvent Taxpayer Exclusion Learning Objectives After completing this course, the student will be

More information

Real Estate Accounting Potpourri. Presented by: Jason Thompson Kimberly Brown and Stephanie Onzay

Real Estate Accounting Potpourri. Presented by: Jason Thompson Kimberly Brown and Stephanie Onzay Real Estate Accounting Potpourri Presented by: Jason Thompson Kimberly Brown and Stephanie Onzay Tax Consequences of Debt Discharge & Foreclosure Rules Outline Tax consequences of forgiven debt if: Insolvent

More information

REAL ESTATE PROPERTY FORECLOSURE and CANCELLATION OF DEBT AUDIT TECHNIQUE GUIDE

REAL ESTATE PROPERTY FORECLOSURE and CANCELLATION OF DEBT AUDIT TECHNIQUE GUIDE REAL ESTATE PROPERTY FORECLOSURE and CANCELLATION OF DEBT AUDIT TECHNIQUE GUIDE NOTE: This document is not an official pronouncement of the law or the position of the Service and cannot be used, cited,

More information

The 1099- C, Insolvency, and the Cancellation of Debt: What you Need to Know

The 1099- C, Insolvency, and the Cancellation of Debt: What you Need to Know Moving Your Practice in the Right Direction TM The 1099- C, Insolvency, and the Cancellation of Debt: What you Need to Know A Practice Essentials Presentation 2010 OnePath Practice Management Advisors,

More information

Getting the Jump on Year-End Tax Planning Ideas for Individuals

Getting the Jump on Year-End Tax Planning Ideas for Individuals Getting the Jump on Year-End Tax Planning Ideas for Individuals Broadcast Date: Sept. 26, 2012 Copyright 2012 All-Star Tax Series, LLC 3.8% Medicare Surtax As applied to individuals, tax is 3.8% of lesser

More information

CANCELLATION OF DEBT(COD) Applicable Entities COD. Informational Return. Identifiable Event. IRC Sec. 6050P:

CANCELLATION OF DEBT(COD) Applicable Entities COD. Informational Return. Identifiable Event. IRC Sec. 6050P: Tax Consequences of Foreclosure Philip J. Rosenkranz Staff Attorney Tax Consequences in Foreclosure Two distinct taxable Events: 1.Cancellation of debt 2. Gain or loss The Legal Aid Society of Milwaukee,

More information

Cancelled Debt Remains Issue for Homeowners

Cancelled Debt Remains Issue for Homeowners Cancelled Debt Remains Issue for Homeowners Let s Talk Tax By Brett Hersh, EA, MBA The housing crisis may have dropped from the headlines in recent months. Unfortunately, however, the crisis remains a

More information

Real Estate Debt Workout Tax Issues & Coping Strategies

Real Estate Debt Workout Tax Issues & Coping Strategies Real Estate Debt Workout Tax Issues & Coping Strategies Charles R. Beaudrot Partner, Tax and Real Estate Capital Markets Practices 404.504.7753 cbeaudrot@mmmlaw.com Timothy S. Pollock Partner, Tax, Real

More information

FORECLOSURE TAXATION

FORECLOSURE TAXATION FORECLOSURE TAXATION Phil Rosenkranz Attorney At Law Legal Aid Society of Milwaukee 521 North 8th Street Milwaukee, Wisconsin 53233 (414) 727-5300 (414) 291-5488 (fax) prosenkranz@lasmilwaukee.com Sean

More information

This publication is distributed with the understanding that the authors and publisher are not engaged in rendering legal, accounting or other

This publication is distributed with the understanding that the authors and publisher are not engaged in rendering legal, accounting or other This publication is distributed with the understanding that the authors and publisher are not engaged in rendering legal, accounting or other professional advice and assume no liability in connection with

More information

Canceled Debts, Foreclosures, Repossessions, and Abandonments

Canceled Debts, Foreclosures, Repossessions, and Abandonments Department of the Treasury Internal Revenue Service Publication 4681 Cat. No. 51508F Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals) For use in preparing 2013 Returns Contents

More information

WHY THE EXPIRATION OF THE MORTGAGE DEBT FORGIVENESS ACT RARELY APPLIES TO ARIZONA SHORT SALES 1

WHY THE EXPIRATION OF THE MORTGAGE DEBT FORGIVENESS ACT RARELY APPLIES TO ARIZONA SHORT SALES 1 WHY THE EXPIRATION OF THE MORTGAGE DEBT FORGIVENESS ACT RARELY APPLIES TO ARIZONA SHORT SALES 1 After years of extensions to the Mortgage Debt Forgiveness Relief Act, this act will expire at the end of

More information

DEALING WITH THE BANKRUPT PROPERTY OWNER BY HARRY CHARLES AUGUST 22, 2008 & AUGUST 28, 2008

DEALING WITH THE BANKRUPT PROPERTY OWNER BY HARRY CHARLES AUGUST 22, 2008 & AUGUST 28, 2008 DEALING WITH THE BANKRUPT PROPERTY OWNER BY HARRY CHARLES AUGUST 22, 2008 & AUGUST 28, 2008 FORECLOSURE: ISSUES, TRENDS AND PERSPECTIVES IN COMMERCIAL LAW MOBAR CLE 1. What is foreclosure for tax purposes?

More information

What the Bank Giveth, the IRS May (Partially) Take Away An Introduction to the Tax Aspects of Workouts

What the Bank Giveth, the IRS May (Partially) Take Away An Introduction to the Tax Aspects of Workouts What the Bank Giveth, the IRS May (Partially) Take Away An Introduction to the Tax Aspects of Workouts February 17, 2009 By: Gregory R. Wilson Many individual and business taxpayers are currently struggling

More information

Real Property: Cancellation of Debt and Foreclosure

Real Property: Cancellation of Debt and Foreclosure Real Property: Cancellation of Debt and Foreclosure Kim Lawson Senior tax analyst Small Business/Self-Employed Division May 16, 2012 The information contained in this presentation is current as of the

More information

Part 1 Cancellation of Debt Principal Residence. Slide 2 Objectives At the end of this lesson, using the resource materials, you will be able to:

Part 1 Cancellation of Debt Principal Residence. Slide 2 Objectives At the end of this lesson, using the resource materials, you will be able to: Slide 1 Welcome! The Cancellation of Debt lesson is optional specialty training available only on Link & Learn Taxes for volunteers with an Advanced, Military, or International Certification. A separate

More information

Department of Legislative Services 2012 Session

Department of Legislative Services 2012 Session House Bill 600 Ways and Means Department of Legislative Services 2012 Session FISCAL AND POLICY NOTE Revised (Delegate Zucker, et al.) HB 600 Budget and Taxation Income Tax - Subtraction Modification -

More information

REAL ESTATE DEBT OUTS ) AND FORECLOSURES: SELECTED TAX CONSEQUENCES

REAL ESTATE DEBT OUTS ) AND FORECLOSURES: SELECTED TAX CONSEQUENCES REAL ESTATE DEBT RESTRUCTURING ( WORK- OUTS ) AND FORECLOSURES: SELECTED TAX CONSEQUENCES Presented by Robert Falb Robert Honigman Arent Fox LLP Washington, DC New York, NY Los Angeles, CA October 15 and

More information

TAX CONSEQUENCES OF MORTGAGE MODIFICATIONS

TAX CONSEQUENCES OF MORTGAGE MODIFICATIONS TAX CONSEQUENCES OF MORTGAGE MODIFICATIONS 1 Presenters: Jeff Gentes, Connecticut Fair Housing Center Elizabeth Maresca, Fordham Law School Diane E. Thompson, NCLC CANCELLATION OF DEBT - GENERAL RULES

More information

ASSEMBLY COMMITTEE ON REVENUE AND TAXATION Philip Ting, Chair. AB 99 (Perea) As Amended February 18, 2015 SUSPENSE

ASSEMBLY COMMITTEE ON REVENUE AND TAXATION Philip Ting, Chair. AB 99 (Perea) As Amended February 18, 2015 SUSPENSE Page 1 Date of Hearing: May 18, 2015 ASSEMBLY COMMITTEE ON REVENUE AND TAXATION Philip Ting, Chair 2/3 vote. Urgency. Fiscal committee. AB 99 (Perea) As Amended February 18, 2015 SUSPENSE SUBJECT: Personal

More information

HOME MORTGAGE FORGIVENESS IN CALIFORNIA AND THE RELATED INCOME TAX CONSEQUENCES

HOME MORTGAGE FORGIVENESS IN CALIFORNIA AND THE RELATED INCOME TAX CONSEQUENCES I. INTRODUCTION HOME MORTGAGE FORGIVENESS IN CALIFORNIA AND THE RELATED INCOME TAX CONSEQUENCES By Belan Wagner, Minna Yang and Jordan Lui This article addresses the tax consequences arising from the relief

More information

Insolvency Procedures under Section 108

Insolvency Procedures under Section 108 Income Tax Insolvency Insights Insolvency Procedures under Section 108 Irina Borushko and Urmi Sampat In the current prolonged recession, many industrial and commercial entities have had to restructure

More information

Apple Federal Credit Union. Reporting Delinquent Matters and 1099-A and 1099-C Presentation 2014

Apple Federal Credit Union. Reporting Delinquent Matters and 1099-A and 1099-C Presentation 2014 Apple Federal Credit Union Reporting Delinquent Matters and 1099-A and 1099-C Presentation 2014 Discussion Topics Reporting Delinquent Matters 1099 Overview 1099-A 1009-C IRS Position on 1099-C Bankruptcy

More information

SPECIAL ALERT: MORTGAGE FORGIVENESS DEBT RELIEF ACT OF 2007 BRINGS TAX CHANGES TO REAL ESTATE

SPECIAL ALERT: MORTGAGE FORGIVENESS DEBT RELIEF ACT OF 2007 BRINGS TAX CHANGES TO REAL ESTATE SPECIAL ALERT: MORTGAGE FORGIVENESS DEBT RELIEF ACT OF 2007 BRINGS TAX CHANGES TO REAL ESTATE By Patricia Hughes Mills, J.D., L.L.M. Associate Professor of Clinical Accounting University of Southern California

More information

Cancellation of Debt

Cancellation of Debt Cancellation of Debt The Cancellation of Debt lesson is optional specialty training available only on Link & Learn Taxes for volunteers with an Advanced Certification. A separate certification is required

More information

RESTRUCTURING DEBT ON DISTRESSED REAL ESTATE

RESTRUCTURING DEBT ON DISTRESSED REAL ESTATE RESTRUCTURING DEBT ON DISTRESSED REAL ESTATE A. Alteration of Mortgage Debt 1. Cancellation or Reduction of Principal Amount of Mortgage Debt - Impact on Mortgagor a. General rule b. No Foreclosure c.

More information

Department of Legislative Services 2014 Session

Department of Legislative Services 2014 Session Senate Bill 596 Budget and Taxation Department of Legislative Services 2014 Session FISCAL AND POLICY NOTE Revised (Senator Peters, et al.) SB 596 Ways and Means Income Tax Subtraction Modification - Mortgage

More information

Simplify the Tax Treatment of Cancellation of Debt Income

Simplify the Tax Treatment of Cancellation of Debt Income Appendices Most Serious Simplify the Tax Treatment of Cancellation of Debt Income LR # 6 LR #6 Simplify the Tax Treatment of Cancellation of Debt Income Problem At a time when the government is taking

More information

26 CFR 1.121-1: Exclusion of gain from sale or exchange of a principal residence. (Also: 61, 165, 691, 1001; 1.61-6, 1.165-1, 1.691(a)-1, 1.1001-1.

26 CFR 1.121-1: Exclusion of gain from sale or exchange of a principal residence. (Also: 61, 165, 691, 1001; 1.61-6, 1.165-1, 1.691(a)-1, 1.1001-1. Section 121. Exclusion of gain from sale of principal residence 26 CFR 1.121-1: Exclusion of gain from sale or exchange of a principal residence. (Also: 61, 165, 691, 1001; 1.61-6, 1.165-1, 1.691(a)-1,

More information

Troubled Commercial Real Estate Debt Restructure

Troubled Commercial Real Estate Debt Restructure Troubled Commercial Real Estate Debt Restructure 2010 Real Estate Conference June 17, 2010 Robert W. Reardon Partner, Real Estate and Commercial Lending Practices 404.504.7774 Charles R. Beaudrot, Jr.

More information

PENNSYLVANIA PERSONAL INCOME TAX GUIDE CANCELLATION OF DEBT FOR PENNSYLVANIA PERSONAL INCOME TAX PURPOSES

PENNSYLVANIA PERSONAL INCOME TAX GUIDE CANCELLATION OF DEBT FOR PENNSYLVANIA PERSONAL INCOME TAX PURPOSES CHAPTER 24: CANCELLATION OF DEBT FOR PENNSYLVANIA PERSONAL INCOME TAX PURPOSES TABLE OF CONTENTS I. OVERVIEW OF CANCELLATION OF DEBT FOR PENNSYLVANIA PERSONAL INCOME TAX PURPOSES... 7 A. In General...

More information

Treatment of COD Income by Partnerships

Treatment of COD Income by Partnerships Treatment of COD Income by Partnerships Stafford Presentation January 28, 2015 Polsinelli PC. In California, Polsinelli LLP Allocation of COD Income COD income is allocated to those partners who are partners

More information

FARM LEGAL SERIES June 2015 Tax Considerations in Liquidations and Reorganizations

FARM LEGAL SERIES June 2015 Tax Considerations in Liquidations and Reorganizations Agricultural Business Management FARM LEGAL SERIES June 2015 Tax Considerations in Liquidations and Reorganizations Phillip L. Kunkel, Jeffrey A. Peterson, S. Scott Wick Attorneys, Gray Plant Mooty INTRODUCTION

More information

no--asset 7 s asset 7 s

no--asset 7 s asset 7 s Bankruptcy Questions Answered! Attorney to Non- Attorney Robert McKenzie, EA, Esq. Types of Bankruptcies This is not an easy subject, but our goal is to distill it to key issues you need to know as a return

More information

ANALYSIS OF ORIGINAL BILL

ANALYSIS OF ORIGINAL BILL Franchise Tax Board ANALYSIS OF ORIGINAL BILL Author: Harkey Analyst: Scott McFarlane Bill Number: AB 2358 Related Bills: See Legislative History Telephone: 845-6075 Introduced Date: February 21, 2014

More information

What does it mean for real property to be secured by or encumbered by debt?

What does it mean for real property to be secured by or encumbered by debt? What does it mean for real property to be secured by or encumbered by debt? Todd Golub Beverly Katz David A. Miller Baker & McKenzie LLP Internal Revenue Service Ernst & Young LLP Chicago, Illinois Washington,

More information

Foreclosures on the Rise

Foreclosures on the Rise That Pesky COD Karen Brosi, EA, CFP Foreclosures 2 1 Foreclosures on the Rise Top 4 states at Sep 30, 2009: Nevada Arizona California Florida 2.5 million properties p received default notice first 9 months

More information

Building Your Tax Knowledge

Building Your Tax Knowledge Building Your Tax Knowledge Foreclosures & Debt Relief The 1099-A and C November, 2012 William Roos, EA Table of Contents Foreclosures and Cancellation of Debt... 1 Introduction... 1 Types of Debt... 2

More information

Federal Income Taxation Chapter 7 Receipt Subject to Offsetting Liability

Federal Income Taxation Chapter 7 Receipt Subject to Offsetting Liability Presentation: Federal Income Taxation Chapter 7 Receipt Subject to Offsetting Liability Professors Wells September 21, 2015 Transactions with Borrowed Funds p.437 No income realized upon the receipt of

More information

state tax notes Taxation of Foreclosures And Short Sales in California

state tax notes Taxation of Foreclosures And Short Sales in California state tax notes Taxation of Foreclosures And Short Sales in California Volume 66, Number 4 October 22, 2012 Persistence of Residence (After You ve Moved to Florida) New Jersey Minimum Assessment Looms

More information

Mortgage Forgiveness Debt Relief Act of 2007 Reduces Negative Tax Consequences from Foreclosures

Mortgage Forgiveness Debt Relief Act of 2007 Reduces Negative Tax Consequences from Foreclosures Mortgage Forgiveness Debt Relief Act of 2007 Reduces Negative Tax Consequences from Foreclosures APRIL 2008 - During the recent U.S. real estate boom, some lending institutions abandoned all caution. Lending

More information

NH&RA Fall Developers Forum October 18-19, 2010 A Few Things to Remember About Debt Restructuring

NH&RA Fall Developers Forum October 18-19, 2010 A Few Things to Remember About Debt Restructuring NH&RA Fall Developers Forum October 18-19, 2010 A Few Things to Remember About Debt Restructuring Forrest Milder, Nixon Peabody LLP Roger Yorkshaitis, Gatehouse Group, Inc., Overview -- 1 The cancellation

More information

Tax Issues for Bankruptcy & Insolvency

Tax Issues for Bankruptcy & Insolvency Tax Issues for Bankruptcy & Insolvency By David S. De Jong, Esquire, CPA Stein, Sperling, Bennett, De Jong, Driscoll & Greenfeig, PC 25 West Middle Lane Rockville, Maryland 20850 301-838-3204 ddejong@steinsperling.com

More information

Instructions for Forms 1099-A and 1099-C

Instructions for Forms 1099-A and 1099-C 2016 Instructions for Forms 1099-A and 1099-C Department of the Treasury Internal Revenue Service Acquisition or Abandonment of Secured Property and Cancellation of Debt Section references are to the Internal

More information

Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment)

Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) Form 982 (Rev. July 2013) Department of the Treasury Internal Revenue Service Name shown on return Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) OMB No.

More information

Leveraging New IRS Rules Eliminating 36-Month Testing Period for Cancellation of Debt Income

Leveraging New IRS Rules Eliminating 36-Month Testing Period for Cancellation of Debt Income Leveraging New IRS Rules Eliminating 36-Month Testing Period for Cancellation of Debt Income MONDAY, DECEMBER 15, 2014, 1:00-2:50 pm Eastern IMPORTANT INFORMATION This program is approved for 2 CPE credit

More information

10.0 AT-RISK LIMITATIONS

10.0 AT-RISK LIMITATIONS Page 1 of 21 Table of Contents 10.0 AT-RISK LIMITATIONS 10.1 General Overview IRC 465, R&TC 17551, and R&TC 24691 10.2 Amount At-Risk 10.3 Contributions of Cash or Other Property 10.4 Contributions of

More information

WORKING OUT AND RESTRUCTURING DISTRESSED DEBT TAX TRAPS AND TECHNIQUES TO ACHIEVE FAVORABLE OUTCOMES

WORKING OUT AND RESTRUCTURING DISTRESSED DEBT TAX TRAPS AND TECHNIQUES TO ACHIEVE FAVORABLE OUTCOMES WORKING OUT AND RESTRUCTURING DISTRESSED DEBT TAX TRAPS AND TECHNIQUES TO ACHIEVE FAVORABLE OUTCOMES State Bar of Wisconsin Annual Convention May 6, 2009 Richard A. Latta Michael Best & Friedrich LLP One

More information

When the IRS StRIkeS How to Get out of a Bind

When the IRS StRIkeS How to Get out of a Bind Representing Non-Filers How Not to Lose Your EA License Vol.29 No.5 When the IRS StRIkeS How to Get out of a Bind Turning a Practice into a Business Member Resource Guide President s Message Capitol Corner

More information

Attention: See IRS Publications 1141, 1167, 1179 and other IRS resources for information about printing these tax forms.

Attention: See IRS Publications 1141, 1167, 1179 and other IRS resources for information about printing these tax forms. Attention: This form is provided for informational purposes only. Copy A appears in red, similar to the official IRS form. Do not file copy A downloaded from this website. The official printed version

More information

ANALYSIS OF AMENDED BILL

ANALYSIS OF AMENDED BILL Franchise Tax Board ANALYSIS OF AMENDED BILL Author: Perea Analyst: Scott McFarlane Bill Number: AB 99 Related Bills: See Legislative History Telephone: 845-6075 Introduced Date: Amended Date: Attorney:

More information

VITA/TCE Specialty Course Cancellation of Debt (COD) Principal Residence Volunteer Income Tax Assistance (VITA) / Tax Counseling for the Elderly (TCE)

VITA/TCE Specialty Course Cancellation of Debt (COD) Principal Residence Volunteer Income Tax Assistance (VITA) / Tax Counseling for the Elderly (TCE) 5182 VITA/TCE Specialty Course Cancellation of Debt (COD) Principal Residence Volunteer Income Tax Assistance (VITA) / Tax Counseling for the Elderly (TCE) 2014 COURSE AND TEST Take your VITA/TCE training

More information

Q: Will I have to pay federal taxes on the money my lender loses in the short sale?

Q: Will I have to pay federal taxes on the money my lender loses in the short sale? Q: What is a Short Sale? Answer: In a short sale, the lender agrees to settle the debt owed on the property for less than the full amount. Settled means that the lender is writing off the debt (which is

More information

Foreclosures, Repossessions, and Cancelled Debt

Foreclosures, Repossessions, and Cancelled Debt CPE/CE 4 Credit Hours Foreclosures, Repossessions, and Cancelled Debt Help Clients Get Back on Their Feet 2014 Tax Year Interactive Self-Study CPE/CE Course Foreclosures, Repossessions, and Cancelled Debt

More information

4942 VITA/TCE 2013 Volunteer Income Tax Assistance (VITA) / Tax Counseling for the Elderly (TCE) www.irs.gov Internal Revenue Service

4942 VITA/TCE 2013 Volunteer Income Tax Assistance (VITA) / Tax Counseling for the Elderly (TCE) www.irs.gov Internal Revenue Service 4942 VITA/TCE Specialty Courses Cancellation of Debt (COD) and Health Savings Accounts (HSAs) Volunteer Income Tax Assistance (VITA) / Tax Counseling for the Elderly (TCE) 2013 TEST Take your VITA/TCE

More information

An Overview of Foreclosure

An Overview of Foreclosure An Overview of Foreclosure While the rising number of foreclosures is an alarming national trend, the real hardship is for any individual or family who knows the threat of foreclosure firsthand. Unfortunately,

More information

Mortgage Interest & Tracing Rules

Mortgage Interest & Tracing Rules Mortgage Interest & Tracing Rules By Phil Shaffer, EA, CFP Acquisition Debt Main or second home Acquire Construct Substantially ImproveĀ» Can be additional amounts Must be secured by the home Debt is limited

More information

The mechanics of foreclosure are specific to the laws of the State in

The mechanics of foreclosure are specific to the laws of the State in Unraveling the Mystery of Cancellation of Indebtedness Income What Borrowers Need to Know of the Potential Tax Costs of Loan Workouts and Foreclosures by Edward J. Hannon, Partner, Corporate and Real Estate

More information

Selected Debt Restructuring Issues. Friday, January 22, 2010 Tax Law Section

Selected Debt Restructuring Issues. Friday, January 22, 2010 Tax Law Section Selected Debt Restructuring Issues Friday, January 22, 2010 Tax Law Section Robert E. August, Esq. Merline & Meacham, PA P.O. Box 10796 Greenville, SC 29603 p. (864) 242-4080 f. (864) 242-5758 baugust@merlineandmeacham.com

More information

Short Sale Tax Forgiveness. Presenters: Matt Roberts, C.A.R. Federal Government Affairs Manager Sanjay Wagle, C.A.R. Senior Legal Counsel

Short Sale Tax Forgiveness. Presenters: Matt Roberts, C.A.R. Federal Government Affairs Manager Sanjay Wagle, C.A.R. Senior Legal Counsel Short Sale Tax Forgiveness Presenters: Matt Roberts, C.A.R. Federal Government Affairs Manager Sanjay Wagle, C.A.R. Senior Legal Counsel Background WHY WAS MORTGAGE DEBT RELIEF NEEDED? Response to growing

More information

Foreclosures, Repossessions, and Cancelled Debt

Foreclosures, Repossessions, and Cancelled Debt CPE/CE 4 Credit Hours Foreclosures, Repossessions, and Cancelled Debt Help Clients Get Back on Their Feet Interactive Self-Study CPE/CE Course Foreclosures, Repossessions, and Cancelled Debt Self-Study

More information

DEBT FORGIVENESS AND MODIFICATION: A Primer for the Non-tax Attorney. Wayne R. Johnson, Esq. 1

DEBT FORGIVENESS AND MODIFICATION: A Primer for the Non-tax Attorney. Wayne R. Johnson, Esq. 1 DEBT FORGIVENESS AND MODIFICATION: A Primer for the Non-tax Attorney by Wayne R. Johnson, Esq. 1 The last two years have been trying to say the least. The dot-com implosion and the events of September

More information

BEFORE THE TAX COMMISSION OF THE STATE OF IDAHO ) ) ) ) ) ) ) ) ) PROCEDURAL BACKGROUND

BEFORE THE TAX COMMISSION OF THE STATE OF IDAHO ) ) ) ) ) ) ) ) ) PROCEDURAL BACKGROUND BEFORE THE TAX COMMISSION OF THE STATE OF IDAHO In the Matter of the Protest of, Petitioners. DOCKET NO. 20644 DECISION PROCEDURAL BACKGROUND On August 3, 2007, the Income Tax Audit Division of the Idaho

More information

Income Tax Planning for Commercial Real Estate Debt Restructuring

Income Tax Planning for Commercial Real Estate Debt Restructuring Bankruptcy Planning Insights Income Tax Planning for Commercial Real Estate Debt Restructuring Robert F. Reilly, CPA Many industry observers forecast a continued downturn in the commercial real estate

More information

Department of Legislative Services 2014 Session

Department of Legislative Services 2014 Session Department of Legislative Services 2014 Session HB 264 House Bill 264 Ways and Means FISCAL AND POLICY NOTE (Delegate Luedtke) Budget and Taxation Income Tax - Subtraction Modification - Student Loan Debt

More information

How Property Owners In Foreclosure\Short-Sale Can Avoid Paying Taxes On 1099\Foregiveness Of Debt

How Property Owners In Foreclosure\Short-Sale Can Avoid Paying Taxes On 1099\Foregiveness Of Debt NEW PROBLEM-SOLVING RESEACH REPORT: How Property Owners In Foreclosure\Short-Sale Can Avoid Paying Taxes On 1099\Foregiveness Of Debt Albert Aiello Includes Avoidance Strategies For Both Home Owners In

More information

Attention: See IRS Publications 1141, 1167, 1179 and other IRS resources for information about printing these tax forms.

Attention: See IRS Publications 1141, 1167, 1179 and other IRS resources for information about printing these tax forms. Attention: This form is provided for informational purposes only. Copy A appears in red, similar to the official IRS form. Do not file copy A downloaded from this website. The official printed version

More information

TAX ASPECTS OF DEBT MODIFICATION AND FORECLOSURE

TAX ASPECTS OF DEBT MODIFICATION AND FORECLOSURE MAY 19, 2010 TAX ASPECTS OF DEBT MODIFICATION AND FORECLOSURE Using Tax Savings to Make Better Distressed Debt Deals BRIAN DONNELLY DEAN GLOSTER Overview Tax Issues Are Certain, at the Death or Rebirth

More information

Home Mortgage Interest Deduction

Home Mortgage Interest Deduction Department of the Treasury Internal Revenue Service Publication 936 Cat.. 10426G Home Mortgage Interest Deduction For use in preparing 1998 Returns Contents Introduction... 1 Part I: Home Mortgage Interest...

More information

DEBT CANCELLATION AND FORECLOSURE ISSUES Code Sec 108 Income for Discharge of Indebtedness and Code Sec 1017 Discharge of Indebtedness

DEBT CANCELLATION AND FORECLOSURE ISSUES Code Sec 108 Income for Discharge of Indebtedness and Code Sec 1017 Discharge of Indebtedness Debt Cancellation & Foreclosure DEBT CANCELLATION AND FORECLOSURE ISSUES Code Sec 108 Income for Discharge of Indebtedness and Code Sec 1017 Discharge of Indebtedness NOTE - Bankruptcy This material only

More information

General Rules 1. All income is taxable.

General Rules 1. All income is taxable. Chapter 17 Pages 239-252 General Rules 1. All income is taxable. p. 239 2. Cancelled debt is income. 3. Cancelled debt is taxable: a. To a solvent taxpayer. b. To the extent solvency is restored. Warning!

More information

Mortgage Foreclosure Tax Issues

Mortgage Foreclosure Tax Issues Mortgage Foreclosure Tax Issues 2321 N. Loop Drive, Ste 200 Ames, Iowa 50010 www.calt.iastate.edu October 8, 2007 - by Roger McEowen* Overview Numerous factors have contributed to the current problems

More information

Attention: See IRS Publications 1141, 1167, 1179 and other IRS resources for information about printing these tax forms.

Attention: See IRS Publications 1141, 1167, 1179 and other IRS resources for information about printing these tax forms. Attention: This form is provided for informational purposes only. Copy A appears in red, similar to the official IRS form. Do not file copy A with the IRS. The official printed version of this IRS form

More information

Department of Legislative Services 2012 Session

Department of Legislative Services 2012 Session House Bill 640 Ways and Means Department of Legislative Services 2012 Session FISCAL AND POLICY NOTE Revised (Delegate Serafini, et al.) HB 640 Budget and Taxation Income Tax - Subtraction Modification

More information

Making the Best of Bad Situations

Making the Best of Bad Situations Making the Best of Bad Situations Course Description & Study Guide This course will teach participants how to apply, implement, and evaluate the strategic tax aspects of marital dissolutions and living

More information

Outline: 108 Cancellation of Debt Income

Outline: 108 Cancellation of Debt Income Outline: 108 Cancellation of Debt Income Contents Page I. GROSS INCOME INCLUDES... 2 A. Definition... 2 B. Policies... 3 II. 108 GENERALLY... 4 A. Definitions... 4 B. 108(a) Exclusions from Income... 5

More information

REAL ESTATE PARTNERS LIMITED (A CALIFORNIA LIMITED PARTNERSHIP)

REAL ESTATE PARTNERS LIMITED (A CALIFORNIA LIMITED PARTNERSHIP) (A CALIFORNIA LIMITED PARTNERSHIP) INDEPENDENT AUDITORS' REPORT AND FINANCIAL STATEMENTS DECEMBER 31, 1999 (A CALIFORNIA LIMITED PARTNERSHIP) TABLE OF CONTENTS PAGE INDEPENDENT AUDITORS' REPORT 1 FINANCIAL

More information

IMPACT. Taxpayer implications of an Economic Downturn TAX IMPLICATIONS

IMPACT. Taxpayer implications of an Economic Downturn TAX IMPLICATIONS TAX IMPLICATIONS IMPACT Taxpayer implications of an Economic Downturn By Joseph LiPari, CPA, M.B.A. As the United States continues to be mired in its worst recession in 80 years, we are all well aware

More information

IMPACT. November/December 2011. Watch out for tax bills delivered COD. Lending to or borrowing from your company the right way

IMPACT. November/December 2011. Watch out for tax bills delivered COD. Lending to or borrowing from your company the right way tax November/December 2011 IMPACT Tax treatment of debt forgiveness Watch out for tax bills delivered COD Lending to or borrowing from your company the right way Why jointly owned property may not be a

More information

How should banks account for their investment in other real estate owned (OREO) property?

How should banks account for their investment in other real estate owned (OREO) property? TOPIC 5: OTHER ASSETS 5A. REAL ESTATE Question 1: (December 2008) How should banks account for their investment in other real estate owned (OREO) property? Detailed accounting guidance for OREO is provided

More information

IMPACT. November/December 2011. Watch out for tax bills delivered COD. Lending to or borrowing from your company the right way

IMPACT. November/December 2011. Watch out for tax bills delivered COD. Lending to or borrowing from your company the right way tax November/December 2011 IMPACT Tax treatment of debt forgiveness Watch out for tax bills delivered COD Lending to or borrowing from your company the right way Why jointly owned property may not be a

More information

MORTGAGE FORGIVENESS DEBT RELIEF ACT OF 2007 (eff. 12/20/07). ABA Tax Section, Pro Bono Committee, Saturday, May 8, 2008, 9:00a.m.

MORTGAGE FORGIVENESS DEBT RELIEF ACT OF 2007 (eff. 12/20/07). ABA Tax Section, Pro Bono Committee, Saturday, May 8, 2008, 9:00a.m. MORTGAGE FORGIVENESS DEBT RELIEF ACT OF 2007 (eff. 12/20/07). ABA Tax Section, Pro Bono Committee, Saturday, May 8, 2008, 9:00a.m. By Frances D. Sheehy, Esq. Law Office of Frances D. Sheehy 1367 Lyons

More information

Foreclosures, Like Kind Exchanges and LLC Restructurings Deferring the Gain that Arises from the Disposition of Distressed Property

Foreclosures, Like Kind Exchanges and LLC Restructurings Deferring the Gain that Arises from the Disposition of Distressed Property Foreclosures, Like Kind Exchanges and LLC Restructurings Deferring the Gain that Arises from the Disposition of Distressed Property June, 2013 Presented by: Mary Cunningham, President, Chicago Deferred

More information

Tax Talk For Tough Times: A Primer On Cancellation Of Debt And Related Partnership Matters

Tax Talk For Tough Times: A Primer On Cancellation Of Debt And Related Partnership Matters Tax Talk For Tough Times: A Primer On Cancellation Of Debt And Related Partnership Matters Walter R. Rogers, Jr. Tough times often result in canceled debt and unexpected income. Walter R. Rogers, Jr.,

More information

Common Tax Issues in a Down Economy, IRS Red Flags & Transactions in Property

Common Tax Issues in a Down Economy, IRS Red Flags & Transactions in Property Common Tax Issues in a Down Economy, IRS Red Flags & Transactions in Property Pedram Ben-Cohen Attorney & CPA BEN-COHEN LAW FIRM 1801 Avenue of the Stars, Suite 1025 Los Angeles, CA 90067-5809 Direct Dial:

More information

CANCELLATION OF DEBT by. ROBERT E. McKENZIE,, ATTORNEY

CANCELLATION OF DEBT by. ROBERT E. McKENZIE,, ATTORNEY CANCELLATION OF DEBT by ROBERT E. McKENZIE,, ATTORNEY ARNSTEIN & LEHR LLP SUITE 1200 120 SOUTH RIVERSIDE PLAZA Chicago, Illinois 60606 (312) 876-7100 REMCKENZIE@ARNSTEIN.COM http://www.mckenzielaw.com/

More information

A security deed is an absolute conveyance of title to land from borrower to lender that includes the following provisions:

A security deed is an absolute conveyance of title to land from borrower to lender that includes the following provisions: Chapter 39 The Security Deed and the Promissory Note SECURITY DEEDS A security deed (also known as a deed to secure debt, loan deed, or warranty deed to secure debt) is the most common form of securing

More information

The Top Seven Financial Pitfalls Every Homeowner Facing Foreclosure Must Avoid

The Top Seven Financial Pitfalls Every Homeowner Facing Foreclosure Must Avoid The Top Seven Financial Pitfalls Every Homeowner Facing Foreclosure Must Avoid The foreclosure process is perplexing, even for those experienced in real estate. Real estate agents, attorneys, mortgage

More information

Cancellation of Debt (COD) R. Bruce McCommons Harford County, MD TrC 12/4/2013 rbrucemcc@comcast.net

Cancellation of Debt (COD) R. Bruce McCommons Harford County, MD TrC 12/4/2013 rbrucemcc@comcast.net Cancellation of Debt (COD) R. Bruce McCommons Harford County, MD TrC 12/4/2013 rbrucemcc@comcast.net 1 Cancellation of debt (COD)... Generally, if a debt for which the taxpayer was personally responsible

More information