Table of Contents.

Description:

Taxpayers may find themselves unable to repay home mortgages, credit card debt or other personal or business loans. Foreclosures can be an unfortunate occurrence during situations like these. Naturally, this event is emotional for taxpayers, and they look to their tax professional for guidance on how this affects their tax situation. When a foreclosure occurs, the result is a deemed sale of the property. If the creditor cancels the debt, the debtor may or may not have to recognize income. This textbook guides you through the rules for foreclosures, explains how to include or exclude income from debt cancellation on the debtor’s tax return and explores the effect of excluding canceled debt on the taxpayer’s other tax attributes.

Foreclosures and Debt Cancellation covers:

• Applying information from Form 1099-A, Acquisition or Abandonment of Secured Property, when reporting the foreclosure.
• Determining the deemed sale price of the foreclosure property to record the taxation of a deemed sale.
• Determining if debt is recourse or nonrecourse.
• Identifying when creditors must issue Form 1099-C, Cancellation of Debt.
• Determining if a taxpayer is insolvent.
• Completing Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment).

Product Details:

Level: Basic level

Author: NATP Staff

Publisher: NATP

Publication Date: 2017 - Textbook has been reviewed and content is accurate for 2018

Format: Electronic

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