Rentals abandoned in '07; Not yet forclosed

[TaxBird]

I have a taxpayer who owned several rental houses. 2007 was a bad year and by Sept 07 the rentals were abandoned because they could not be rented all year. While my client is getting threatening debt collector calls, as of today, the houses are still not formally in foreclosure. Also, the taxpayer has received neither a 1099-A nor a 1099-C. Very odd indeed.

On this I have two questions:

1. Does the taxpayer take depreciation up until the abandonment date or up until the foreclosure date?

2. Same with suspended losses...can the remainder of the passive losses be taken and if so up until what date?

Any feedback would be appreciated.

Thank you in advance.

[Bert73]

I have a taxpayer who owned several rental houses. 2007 was a bad year and by Sept 07 the rentals were abandoned because they could not be rented all year. While my client is getting threatening debt collector calls, as of today, the houses are still not formally in foreclosure. Also, the taxpayer has received neither a 1099-A nor a 1099-C. Very odd indeed.

If they are still receiving debt collector calls, they are not forclosed on yet. If the bank is trying to get the property owner to pay their outstanding balance, the bank will not issue the 1099(s).
TB9-21 states that a loss is recognizes in the amount of the adjusted basis at the time of abandonment, and of course if this is personal property no loss is allowed. ( not sure about the suspended losses)

[TaxBird]

Oh.

I see.

Looks like I'll be preparing an amended 2007.

Crap!

Thanks for your help Bert.

[SFBOB]

Wait for the 1099A or C

You can not prepare an accurate tax return until you have the FMV and debt forgiven amounts, determined by the lender. Order Publication 4681 from the IRS.Your taxpayer will most likly be insolvent at the time of the abandonment.The publication will take you step by step through the tax return preparation. Good Luck. I WOULD GET MY FEE UP FRONT.

[JG EA]

... and of course if this is personal property no loss is allowed.

OP said rentals so loss is allowed.

[TaxBird]

You have a good point.

You can not prepare an accurate tax return until you have the FMV and debt forgiven amounts, determined by the lender. Order Publication 4681 from the IRS.Your taxpayer will most likly be insolvent at the time of the abandonment.The publication will take you step by step through the tax return preparation. Good Luck. I WOULD GET MY FEE UP FRONT.

I'll wait until I have the final amounts. And yes, I've gotten my retainer.

Thanks!