Discussion Archives:1099-C Short Sale Second Home

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Discussion Forum Index --> Advanced Tax Questions --> 1099-C Short Sale Second Home

Discussion Forum Index --> Tax Questions --> 1099-C Short Sale Second Home

Skribblz (talk|edits) said:

10 February 2010
Please discuss...

T/P was building a second home before the RE crash. He had a mortgage of $488K. In 2009, the bank approved a short sale of $450K. It is my understanding that the COD is actually $38K, correct? His 1099-c says $488K.

I know he doesn't get the principle residence exclusion, but how do I help him pay the minimum amount of tax allowed? Insolvency? When it says "interest in 401(k)/Retirement plan" is that the FMV or earning-to-date?

Thank you.

Skribblz (talk|edits) said:

10 February 2010
Correction...loan was $938K and sold for $450K?

what can I do for the t/p?

DaveFogel (talk|edits) said:

10 February 2010
Was he personally liable for the debt?

For purposes of the insolvency exclusion, use the FMV of the taxpayers retirement plan as an asset. If there are no assets but the taxpayer is receiving a monthly pension or annuity, you will have to figure the present value of the payments over the taxpayer's expected remaining lifetime.

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