Category:Foreclosures

From TaxAlmanac, A Free Online Resource for Tax Professionals
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.

From TaxAlmanac

Jump to: navigation, search

Contents

General Info

This page is for foreclosures, cancellation of debt (COD, CODI, cancelled debt, debt cancellation), short sales, debt forgiveness, and any other iterations of activity that may result in 1099-A, 1099-C, utilization of Form 982, reduction of tax attributes, foreclosure, short sale (or "short sell" in certain rare sentence contexts), loan modification, etc.

Starting out - be sure to read Sec. 108 and also the instructions for Form 982 as part of your research. This discussion, while long and complex, includes some good overview info on the topic, especially if you follow the offsite links.

Also, there's a VITA/TCE specialty course on COD that might be useful to you.

On TaxAlmanac, there are so many discussions in this area that when you do a search, you need to include the current year - and then do another search with the prior year - as one of your search terms. Otherwise, you will get so many discussions that you will be overwhelmed.

Also, you'll need to include "1099-A" and "1099-C" - whichever is relevant, or both - in quotes in the search box to get good results.


Errors on the forms

Here are some relevant discussions: Discussion:1099-A Box 5 Wrong, Discussion:1099-C issued for prior year debt, Discussion:Shouldn't they Receive a 1099-A, Discussion:Timing of abandonment/COD income, Discussion:1099C and IRS transcripts, and Discussion:Nature of Debt.


Recourse vs Nonrecourse

See Discussion:Non-recourse debt, Discussion:CA State Foreclosure and Form 1099-A, the January 30 series of posts in Discussion:Cancellation of Debt State of California, Discussion:C.O.D. on Rental Property, Discussion:Foreclosure vs Short Sale Tax Implications, Discussion:Nature of Debt, and also Discussion:When recourse debt becomes nonrecourse debt?.


California Conformity

For 2013: Spidell e-mail flash #2013-18 : No California principal residence COD exclusion for 2013

Prior to 2013: Discussion:Cancellation of debt in california - SB 401 info at end, for pre-SB 401: Discussion:California Election out of Mortgage Relief Exclusion.


Reduction in Tax Attributes

Really, Sec. 108 is the best starting point, along with the form instructions, but also see: Discussion:982 and bankruptcy, Basis adjustments for 982, Discussion:1099A Loss calculation, and others listed below or in a search will cover specifics within the category.


Valuing assets (like pension or retirement assets)

See Discussion:Insolvency with interest in a Pension and Discussion:1099C, insolvency, valuing assets, Discussion:1099-C Short Sale Second Home, Discussion:Insolvency question., Discussion:Cancellation of Debt & Insolvency.


Relevant CCAs/SCAs, etc.

  • SCA 1998-039 - 1099-C forms for joint liability/cosigners, guarantors, insolvency, more
  • CCA 200023001 - allocation of income, COD, debt held jointly
  • CCA 200919035 - QRPBI exclusion CAN apply in the case of a single rental property
  • GCM 35627 - recourse vs nonrecourse
  • PLR 8920019 - Each spouse may determine his or her own extent of insolvency separately, even if the spouses file a joint return.
  • PLR 8918016 - discharge of indebtedness income as a result of a discharge in bankruptcy, and retaining basis after discharge.
  • PLR 9932019 - How to treat assets held by taxpayer and his spouse as tenants by the entirety, when calculating insolvency. (Also see, re: footnote 4: "In states which provide that a debtor’s personal residence is an asset fully exempt from creditors’ claims, regardless of its fair market value, a debtor would be able to exclude the entire fair market value of the residence from his or her assets in an insolvency calculation under section 108."
  • Search for PLRs on the IRS site, looking for 108 in the UILC
  • PLRs are also available at legalbitstream.com, click on the private letter rulings menu and enter the relevant PLR number as the search term.


Common Questions/Search terms

Examples/notes:

  • If your client got a 1099-A, but hasn't yet received a 1099-C: Search "1099-A" "no 1099-C"
  • Or sometimes clients get a 1099-C without a 1099-A: "1099-C" "no 1099-A"
  • In California, Arizona, maybe other states, you sometimes hear about "anti-deficiency statutes"
  • Search for discussions about the CCA/SCAs above, for example, Search "SCA 1998-039, Search "200023001" to get more info on jointly held debt
  • Search for both QPRBI and "Qualified Real Property Business Indebtedness", or both QPRI and "qualified principal residence indebtedness" if one of those terms is applicable to your client's situation
  • Terminology - including the appropriate terms in your search may help you get better results, e.g. "short sale" vs foreclosure (see Discussion:Principal residence foreclosure (& short sale), among others, for the difference), COD or "cancellation of debt"

Note - you can add/subtract terms, and also try plurals or other forms (e.g., 1099C in addition to "1099-C"). Here are more Hints and Tips on How to Search on TaxAlmanac.

Discussions

Note, to be listed here, the discussion or article had to be manually categorized. This happened a lot in 2007, but not much since then, until recently. So do be sure to utilize the search feature in addition to scanning the list below.

Pages in category "Foreclosures"

The following 86 pages are in this category, out of 86 total.

A

D

D cont.

D cont.

H

P

Personal tools