I have a mess and want to make sure I am covering all the bases.
Facts:
In 2006 TP got divorced and remarried. He kept main home after divorce and built a new house for ex-wife and kids to live in. The house was in his name, he paid the mortgage, real estate taxes and all bills for both homes. Both houses had FMV of approx. $1million and were mortgaged 100%.
He sold his primary home in 2007 for $750,000 and received a 1099-C for $157,484.06 canceled debt on second mortgage.
Ex-wife's home went into foreclosure and he received a 1099-A for balance of principal outstanding of $788000 and a FMV of $1 million.
He is insolvent.
Do I need to do anything with this mess? I am running in circles. I am of the opinion that because he is insolvent, he does not have to claim any of the debt forgiveness on either house.
Oh and the TP wants me to use the ex-wife's as investment property and write off the losses.
Lastly, he sold a timeshare that he bought in 2003 for $18,600 and sold in 2007 for $10,700. Because this is a loss on vacation property he can't take the loss, correct?
He moved out of his main home in Dec. 2006 when he got remarried and moved into the new $1.8 million dollar home in new wife's name.
Facts:
In 2006 TP got divorced and remarried. He kept main home after divorce and built a new house for ex-wife and kids to live in. The house was in his name, he paid the mortgage, real estate taxes and all bills for both homes. Both houses had FMV of approx. $1million and were mortgaged 100%.
He sold his primary home in 2007 for $750,000 and received a 1099-C for $157,484.06 canceled debt on second mortgage.
Ex-wife's home went into foreclosure and he received a 1099-A for balance of principal outstanding of $788000 and a FMV of $1 million.
He is insolvent.
Do I need to do anything with this mess? I am running in circles. I am of the opinion that because he is insolvent, he does not have to claim any of the debt forgiveness on either house.
Oh and the TP wants me to use the ex-wife's as investment property and write off the losses.
Lastly, he sold a timeshare that he bought in 2003 for $18,600 and sold in 2007 for $10,700. Because this is a loss on vacation property he can't take the loss, correct?
He moved out of his main home in Dec. 2006 when he got remarried and moved into the new $1.8 million dollar home in new wife's name.
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