Discussion Archives:Deed-in-lieu of Foreclosure Loss

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Discussion Forum Index --> Advanced Tax Questions --> Deed-in-lieu of Foreclosure Loss


Discussion Forum Index --> Tax Questions --> Deed-in-lieu of Foreclosure Loss

TRcpa (talk|edits) said:

28 March 2010
Just need clarification that I'm not missing something. Have a client that has signed a Deed-in-lieu of Foreclosure on a commercial rental property (full disposition). The adjusted basis in the property is approx 850K including unamortized points. The agreed upon release of note/debt and all fees was approx 800K which I assume is the considered FMV of the property (but I don't believe that matters). The 50K loss would be fully deductible in the current year (4797) as would approx 50K in PY unallowed losses (Sch E). The end result though is the client has a 30K NOL and sufficient income in the previous year whereby he could carry it back.

I also believe that since the points are section 163 property they would be expensed immediately vs. considered part of the Sec 1250 gain/loss calculation.

Anything I'm missing?

Thanks in advance.

R2 (talk|edits) said:

29 March 2010
What was the balance on the mortgage?

TRcpa (talk|edits) said:

29 March 2010
The last statement he had (12/31/08), had it at abou 30K less then the payoff amount in the deed. I figure there was accrued interest, termination, and legal fees that brought it up to the payoff amount in the deed of 800K.

Thanks

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