Facts: In Year 1, our individual client (“Client”) bought a
Facts: In Year 1, our individual client (“Client”) bought a house… Facts: In Year 1, our individual client (“Client”) bought a house for $400,000, borrowing $375,000 from a bank (“Bank”) on a nonrecourse basis. Between Years 1 and 5, Client and his family lived in the house. In Year 5, Client moved out and turned the house into a rental at a time when the fair market value (FMV) of the house had dropped to $325,000.In Year 6, when $320,000 was owed on the mortgage, Client sold the house in a “short sale” for $300,000.1 Client immediately paid this amount over to the bank in partial satisfaction of the mortgage. Bank forgave the remaining balance of the debt of $20,000 ($320,000 owed less the $300,000 sales price). Bank issued a Form 1099-C to Client showing cancellation of debt income of $20,000.Client believes the short sale should be reported as a loss of $100,000 from selling the rental property ($400,000 basis – $300,000 sale proceeds). Further, although Client believes that he realized $20,000 of cancellation of debt income, he should not recognize this income because it qualifies for the exclusion related to qualified principal residence debt.Issue: How should Client report the short sale and mortgage cancellation on his Year 6 income tax return?Conclusion: Analysis:Business Accounting TAX 6065
How it works
- Paste your instructions in the instructions box. You can also attach an instructions file
- Select the writer category, deadline, education level and review the instructions
- Make a payment for the order to be assignment to a writer
- Download the paper after the writer uploads it
Will the writer plagiarize my essay?
You will get a plagiarism-free paper and you can get an originality report upon request.
Is this service safe?
All the personal information is confidential and we have 100% safe payment methods. We also guarantee good grades