[WSBARP] Short sale versus foreclosure tax issue
Bryce Dille
BryceD at cdb-law.com
Fri Apr 11 14:37:03 PDT 2014
In most cases in Residential setting bank bids the amount owed so it is a
non issue
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network.
From: Craig Blackmon
Sent: Friday, April 11, 2014 2:25 PM
To: wsbarp at lists.wsbarppt.com
Reply To: wsbarp at lists.wsbarppt.com
Subject: RE: [WSBARP] Short sale versus foreclosure tax issue
I believe so, but the fact of the matter is my counsel includes a very
large punt of all tax issues into the lap of a tax pro, so I’ve generally
faded from the picture by the time any 1099 arrives. I suspect others on
this list have a much better idea of the answer.
Craig
Craig Blackmon
Of Counsel Attorney at Law
<http://lawhg.net/> Holmquist & Gardiner, PLLC
1000 2nd Avenue, Suite 1770 Seattle, WA 98104
Main: (206) 438-9083 Direct: <tel:%28206%29%20694-4601> (206) 438-9295
Cell: (206) 369-5949 Fax: <tel:%28206%29%20694-4601> (206) 694-4601
Founder and Principal of <http://quillrealty.com/> Quill Realty
Smarter Service. Stronger Protection. More Savings.
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From: wsbarp-owner at lists.wsbarppt.com
[mailto:wsbarp-owner at lists.wsbarppt.com] On Behalf Of Eric Nelsen
Sent: Friday, April 11, 2014 2:20 PM
To: wsbarp at lists.wsbarppt.com
Subject: RE: [WSBARP] Short sale versus foreclosure tax issue
I should have known the simple question wasn't really simple. Thanks very
much, Craig.
In your experience, are banks issuing 1099s after nonjudicial foreclosures
(as opposed to after a short sale, which I believe they are doing
routinely)?
Sincerely,
Eric
Eric C. Nelsen
SAYRE LAW OFFICES, PLLC
1320 University St
Seattle WA 98101-2837
phone 206-625-0092
fax 206-625-9040
From: wsbarp-owner at lists.wsbarppt.com
[mailto:wsbarp-owner at lists.wsbarppt.com] On Behalf Of Craig Blackmon
Sent: Friday, April 11, 2014 2:14 PM
To: wsbarp at lists.wsbarppt.com
Subject: RE: [WSBARP] Short sale versus foreclosure tax issue
The answers are:
Yes, depending on whether the insolvency exemption applies (I believe the
principal residence exemption was not extended, but I could be wrong
there, and if I am wrong then that may apply as well); and yes
Depends on the tax professional with whom you are consulting. It is a
complicated issue. Some professionals (CPAs, tax attorneys) believe there
is no COD (cancellation of debt) income because a non-judicial foreclosure
results – essentially – in non-recourse debt (likely more of the former
and fewer of the latter hold this belief). Other professionals disagree
and believe in WA a non-judicial foreclosure still results in COD income,
again subject to those potential exemptions.
Craig
Craig Blackmon
Of Counsel Attorney at Law
<http://lawhg.net/> Holmquist & Gardiner, PLLC
1000 2nd Avenue, Suite 1770 Seattle, WA 98104
Main: (206) 438-9083 Direct: <tel:%28206%29%20694-4601> (206) 438-9295
Cell: (206) 369-5949 Fax: <tel:%28206%29%20694-4601> (206) 694-4601
Founder and Principal of <http://quillrealty.com/> Quill Realty
Smarter Service. Stronger Protection. More Savings.
<https://www.facebook.com/quillrealty> Facebook //
<https://twitter.com/QuillRealty> Twitter
This transmission is confidential and intended only for the recipient(s)
noted above. It also may contain materials protected by the
attorney-client privilege or work product doctrine. If it has been sent
to you in error, please delete it and notify the sender immediately.
From: <mailto:wsbarp-owner at lists.wsbarppt.com>
wsbarp-owner at lists.wsbarppt.com [mailto:wsbarp-owner at lists.wsbarppt.com]
On Behalf Of Eric Nelsen
Sent: Friday, April 11, 2014 2:03 PM
To: WSBA Real Property listserve (wsbarp at lists.wsbarppt.com)
Subject: [WSBARP] Short sale versus foreclosure tax issue
Basic questions--If client sells her residence at a short sale and the
bank takes, say, a $40,000 haircut, is that considered forgiveness-of-debt
income to the client that she has to pay taxes on? And does the bank issue
a 1099?
And, in comparison to an actual foreclosure--there's never a
forgiveness-of-debt-income issue on a residential nonjudicial foreclosure,
is there? Despite the lack of a deficiency judgment?
Sincerely,
Eric C. Nelsen
SAYRE LAW OFFICES, PLLC
1320 University St
Seattle WA 98101-2837
phone 206-625-0092
fax 206-625-9040
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