Discussion:Basis, debt & bankruptcy
From TaxAlmanac, A Free Online Resource
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.
From TaxAlmanac
Discussion Forum Index --> Advanced Tax Questions --> Basis, debt & bankruptcy
Discussion Forum Index --> Tax Questions --> Basis, debt & bankruptcy
| 12 April 2008 | |
| S corporation shareholder has collateralized all assets, including his home for the debt of the corporation. Corpration & shareholder both will be filing bankruptcy 2008, bank will own home & they will move to an apartment. Shareholder made some loans to the corporation that will not, obviously be repaid.
For 2007 & prior I have the debt basis as the amount loaned to the corp (approx 130) and any addl pic has been gobbled up & the shareholder has suspended losses. My question is - what happens when the bankreuptcy goes through? Obviously the debt will be forgiven & that will be non taxable, but the shareholder hasn't gotten full benefit of the assets they lost. Is this a wash or is there some tax benefit they will receive due to the loss of their home? | |
| 13 April 2008 | |
| Depends on how the original agreement was structured. If the taxpayer pledged his home as co-borrower, then the basis of the home would add to the basis in his stock. If he pledged the home as guarantor, then a bad debt deduction would be indicated. | |
| 13 April 2008 | |
| Under which chapter are they filing? Chapter 7, 13 or 11? | |
| 12 October 2008 | |
| what happens if they later pay of corporate debt that was not forgiven in bankruptcy? | |
To join in on this discussion, you must first
log in.
