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Foreclosure on 1120s loan personally guaranteed.

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    Foreclosure on 1120s loan personally guaranteed.

    My client is the sole shareholder in an 1120s. The bank foreclosed on his loan. He's closing the doors, out of business.
    He personally guaranteed the note. The note was for a total of $174000. The bank issued a 1099C to him personally for $71000.
    The bank did not issue a 1099C to the S corporation.
    There were no other liabilities.
    The only assets owned at the time of foreclosure were equipment, building, land and goodwill.......each was partially depreciated, (except the land of course).

    As I understand it I can pro rate the foreclosure on the business loan of $103000. as the purchase price toward each asset. The gain or loss on each will flow onto the 4797 of the 1120s and then onto his 1040. The $71000 will go on his 1040 as income, line 21. He's unsure why the bank split the note btw the 1120S and his personal name, and I am unsure as well.
    My question is about the pro rating the foreclosed amount of $103,000 to the assets, has anyone done something like this? Can anyone say if this is an acceptable method?
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