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?