I can't remember I've ever had this before, so checking to make sure I'm handling it correctly.
Client bought house for 103K in 2008 taking out a 102K mortgage.
He struggled with payments and I believe unpaid interest was added to principal. Last 1098 received was 2016 with balance of 106K
Bank foreclosed in 2018 and sent 1099C showing debt discharged at 48K and FMV of property at 56K.
On the Statement of Insolvency I put the resource debt at 48K and the difference between total loan 106K less recourse 48K for a net of 58K. In asset section showing FMV 56K leaving amount of insolvency at 49K. I still need to ask him about retirement account, car, etc, but there is no way he was anything close to this amount.
On 5405 I used basis of 95.5K (103 purchase less 7.5 tax credit). I wasn't sure what to use for selling price, but even it I use FMV, still gives him a large negative for no further repayment of first time buyer credit.
Correct, or am I missing something?
Client bought house for 103K in 2008 taking out a 102K mortgage.
He struggled with payments and I believe unpaid interest was added to principal. Last 1098 received was 2016 with balance of 106K
Bank foreclosed in 2018 and sent 1099C showing debt discharged at 48K and FMV of property at 56K.
On the Statement of Insolvency I put the resource debt at 48K and the difference between total loan 106K less recourse 48K for a net of 58K. In asset section showing FMV 56K leaving amount of insolvency at 49K. I still need to ask him about retirement account, car, etc, but there is no way he was anything close to this amount.
On 5405 I used basis of 95.5K (103 purchase less 7.5 tax credit). I wasn't sure what to use for selling price, but even it I use FMV, still gives him a large negative for no further repayment of first time buyer credit.
Correct, or am I missing something?