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Wendy Reed
Wendy Reed, Enrolled Agent
Category: Tax
Satisfied Customers: 3346
Experience:  15+ years tax preparation and tax advice.
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hi my name is basima polis.. i had a property that was forclssed

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hi my name is XXXXX XXXXX
i had a property that was forclssed by wells fargo bank .wich i tryte to get laon motefication and did not work ..
i had not paid the mortgage for that property since the year of 2007 .and now i received a request for tax return form from the stae of ca franchise tax board .i called them today they asked me fill it out and retun it to them bye July 7-10 .and im in madical leave from my since the year of 2006 .im not sure if i should fill out this forum and retun it back to them or not..thank you for helping me..
Submitted: 4 years ago.
Category: Tax
Expert:  Wendy Reed replied 4 years ago.

Thank you for giving me the opportunity to assist you. I will give the best answer that I can with the information provided.

 

Hello there,

 

You should definitely not ignore this correspondence, and should complete the appropriate form(s)/letters of explanation that they have requested.

 

It is possible that you may have reportable income from the foreclosure from either capital gain or cancellation of debt or both. It depends upon whether this property was a personal residence or not, whether the loan was a recourse loan or not, and the general facts and circumstances of the foreclosure. Generally, there is an exclusion of income allowed for CA for principal residence from tax years 2007 through 2012, but there are some differences depending on the date of the foreclosure.

 

I am providing a link for more information about this, and hopefully you can find the situation that applies to you so you will know how to proceed.

 

http://www.ftb.ca.gov/aboutFTB/newsroom/Mortgage_Debt_Relief_Law.shtml

 

I would urge you to collect any Forms 1099A or 1099C and any other income information that you have and bring your information with the letter you received to a reputable tax professional, so that they can help you answer this request, and file the form that the CA FTB is looking for. If you ignore the correspondence they will most likely assess tax and penalties, and that will be much harder to deal with.

 

Please let me know if you need additional assistance.

Wendy Reed, Enrolled Agent
Category: Tax
Satisfied Customers: 3346
Experience: 15+ years tax preparation and tax advice.
Wendy Reed and 3 other Tax Specialists are ready to help you

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Wendy Reed
Wendy Reed
Tax Professional
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15+ years tax preparation and tax advice.