principal residence is used for Home Office - COD Income?

[jmc]

Generally, there is no Cancellation of Debt Income, when principal residence is foreclosed and the loan is considered Non-recourse loan.

If the 60% of the principal residence is used for Home Office, is there any COD Income? How should I calculate?
I could not find this case from IRS Publications.

[FEDUKE404]

Fuzzy vision

Generally, there is no Cancellation of Debt Income, when principal residence is foreclosed and the loan is considered Non-recourse loan.

If the 60% of the principal residence is used for Home Office, is there any COD Income? How should I calculate?
I could not find this case from IRS Publications.

Did I see 60% ?? Or does this guy/gal just incidentally live at the office??

[solomon]

Generally, there is no Cancellation of Debt Income, when principal residence is foreclosed and the loan is considered Non-recourse loan.

If the 60% of the principal residence is used for Home Office, is there any COD Income? How should I calculate?
I could not find this case from IRS Publications.

I am with FEDUKE - surprised has not been audited yet.

At a minimum there would be unrecaptured 1250 gain. That is to say, that amount could not be excluded on any gain.

[erchess]

Partial Answer

I am sure that 40% of the canceled debt is excludable from income as qualified residential debt. For the home office you might be able to include it as well or you might be able to treat it as Qualified Real Property Business Debt. See Ch 5 of Pub 334. On the other hand the 60% may have to be included in income unless the taxpayer meets another exception such as being insolvent at the time the debt was forgiven.

Solomon posted while I was writing the above and of course he is right about the Section 1250 gain.

[zeros]

FEDUKE: Yes, 60% OIH

Did I see 60% ?? Or does this guy/gal just incidentally live at the office??

They live in one of the closets.

[David1980]

I think after 50% doesn't it become a office home instead of a home office?