1099-a

[RDALMASI]

I have a client whose house was foreclosed in Florida. The House was not their primary residence, but an investment venture. They could not make the payment and the bank took over the house and sent them( NY residents, a 1099-A). The 10099-A box 2 (Balance outstanding bal is $116,110 ; box 4 (fair Mkt. value is $24,750 & box 5 says the borrower was personal liable. How would treat this scenario; What would be the Basis of the property since the bank took it over. I know that Form 4797 must be used, but determining the basis of the property since the bank took over seem to me to be $0.00. Would anyone with a similar situation comment on this? Help will be appreciated....

[Lion]

Basis

I luckily haven't had one of these in years. Isn't their basis whatever their basis was right before the bank took over, the same as if they'd sold it or given it away? Their basis for this disposition of property is their cost plus improvements less depreciation as usual, right?