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cfortunato
cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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cfortunato: XXXXX XXXXX obligation was discharged under Chapter

Resolved Question:

cfortunato: XXXXX XXXXX obligation was discharged under Chapter 7 a year ago. I am negotiating with the lender to accept a Deed in Lieu of Foreclosure for a rental property. When does the IRS consider the legal transfer of ownership, e.g., The date of transfer of deed to lender or the Closing date when the lender sells the condo to a third party (the elapsed time between these points in time could exceed one year)?
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  Fran-mod replied 5 years ago.
Hi, I’m a moderator for this topic and I wonder whether you’re still waiting for an answer. If you are, please let me know and I will do my best to find a professional to assist you right away. If not, feel free to let me know and I will cancel this question for you. Thank you!
Expert:  cfortunato replied 5 years ago.

Hi JACustomer,

Are you negotiating for a deed-in-lieu of foreclosure with the same lender whose loan obligation was discharged in your Bankruptcy.

Customer: replied 5 years ago.

Yes

Expert:  cfortunato replied 5 years ago.

The date that ownership is transferred is the date the deed is signed over to and accepted by the bank. However, if the bank issues a 1099-C debt forgiveness form, you will not have to include the forgiven amount as taxable income because the debt was discharged in a Bankruptcy.

If the bank does issue a 1099-C form, you would simply include IRS form 982 when you file your taxes for the year the 1099-C is issued:

http://www.irs.gov/pub/irs-pdf/f982.pdf.

 

I think this is what you wanted to know. If not, please let me know.
Thank you.
cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience: Bankruptcy professor.
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