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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
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Experience:  10 years experience
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I am filing a final return for an LLC that owned a building.

Customer Question

Hi I am filing a final return for an LLC that owned a building. The building was foreclosed on last December. I do not have enough money to higher a local accountant to I used an accountant in India to prepare the return. Earlier in the year I did some checking and found that they could be a tax liability due to the foreclosure if the amount form the sheriffs sale less expenses was greater than my basis. The LLC did not collect any rent in 2015 and did not make any mortgage payments. As part of the foreclosure the lender took the mortgage amount plus the expenses that there incurred for the property and bought it in the sheriffs sale. Take the sale amount minus they expense they paid puts the amount just above my basis. This number did not however include accrued interest and depreciation which the accountant in India added to the expenses which put the amount below my basis creating a loss. QUESTION: Is it correct to include depreciation and interest in the expenses in this case.
Submitted: 1 month ago.
Category: Tax
Expert:  PDtax replied 1 month ago.

Hi from Just Answer. I'm PDtax, and can assist.

Customer: replied 1 month ago.
I am new to this. What if I say yes? Also, based on my question, can you assist?
Expert:  PDtax replied 1 month ago.

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.

Expert:  PDtax replied 1 month ago.

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.

Just so you know, I accepted the phone call offer, but site admin needs to contact you before the call can be made.

Customer: replied 1 month ago.
I will fix it so we can talk
Customer: replied 1 month ago.
I think it should work now
Expert:  PDtax replied 1 month ago.

The phone call offer from you is not showing on my end.

I will make the offer to you. If agreeable, I will post my phone number in the private link our Offer feature creates, and you can call me directly.


Customer: replied 1 month ago.
It seems that the credit card company is holding payment. Because some many hit from justanswers at the same time. I am going to head a different direction and cancel this request. Don't be too worried about india.

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