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Hi from Just Answer. I'm PDtax, and can assist.
The rules can be involved, and depend on how the foreclosure pays the debt. If you are still liable, for example, then you can't really close out the transaction.
Let's use an example:
Building purchased for $200,000, accum. depr. of $33,000. Mortgage debt of $175,000. Bank forecloses.
Bank sells property for $160,000. You might still owe $15,000.
Once the property is sold, you will be notified of the sale price. use that for the 4797 sale reporting.
If the sale was in full satisfaction of the debt, then you might also have debt forgiveness income.
banks are notorious for delays in sending out the 1099, but if this was a nonrecourse note, then there isn't any debt forgiveness income.
A review of the transaction will likely indicate that there is more to report.
I'm also more than a little unnerved that you can go offshore for US tax reporting. I always figured my profession would be safe from that kind of competition.
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