Here it comes

[Girard Van De Lay]

Short sales!!

I have a client just come in had a short sale early this year before the housing market totally tanked. Question is will she recieve a 1099c for the difference of about 50,000 that occured during the short sale? I looked in TTB on page 14-12 and it still seems unclear. I am located in CA if anyone knows your help would be appriciated.

[DTS]

Cod

Girard,

If you leave me your fax # in my PM box, I'll send you a sheet from an organization here in OC that may shed further light on this for you. It is straightforward and, like I mentioned, may help a bit.

I believe the crux is if it's recourse or non-recourse.

Dennis

[myerstaxes]

I have the same situation

I have a potential new client who says she short saled her home early 2007 and so far no statement from the lender...Here in CA purchase money loans on a residence are non-recourse from my readings...Seems to me that if they owed more than what the home sold for, a 1099-C would be issued...So I am wondering the same thing, are they required to report it to the IRS in the case of short sale?

[DTS]

1099-c?

From what little I've read on this, it seems like the short sale would generate a 1099-C. If the debt relief was from bankruptcy, then no 1099-C, since the debt that was discharged is not considered debt-cancellation income??

I hope someone in the know will jump in here and clarify. We're all going to see much more of this.

Dennis

[joanmcq]

I just had my first client come in who is currently going through foreclosure. She should qualify for the new 'no cancellation of debt income' law. I wonder if this would cause a 1099-C NOT to be issued?

[DTS]

Law

Joan,

Has this proposed law been passed? I was talking to a colleague a month ago and he did not think it had been, yet.

Also, there may be an issue with CA not conforming if/when it is.

Dennis
PS: I guess the law passed and was signed on 12/20/07.

[JSLATER]

Ca has legislation pending for conformity with the Fed law

[taxxcpa]

Short Sale?

Short sales!!

I have a client just come in had a short sale early this year before the housing market totally tanked. Question is will she recieve a 1099c for the difference of about 50,000 that occured during the short sale? I looked in TTB on page 14-12 and it still seems unclear. I am located in CA if anyone knows your help would be appriciated.

I thought a short sale was made using borrowed stock in the stock market when you sell stock you don't own with the intent of buying it after the price drops.

A short sale of Real Estate sounds like someone selling what isn't his'n and will end up in prison. You can't borrow Real Estate from your broker.

[joanmcq]

A short sale in real estate means it is being sold for below the value of the mortgage already on the house. Bank will sometimes allow this to keep it from going into foreclosure. the bank is accepting less than the loan on the house, and writing off the rest of the debt.