Foreclosures and Debt Cancellation Self-Study
Taxpayers may find themselves unable to repay home mortgages, credit card debt, or other personal or business loans. Foreclosures can be an unfortunate occurrence during these situations. Naturally, this event is emotional for taxpayers and they look to their tax professional for guidance on how this affects their tax situation. When a foreclosure occurs, the result is a deemed sale of the property. If the creditor cancels the debt, the debtor may or may not have to recognize income. This course guides the tax professional through the rules for foreclosures, explains how to include or exclude income from debt cancellation on the debtor’s tax return and explores the effect of excluding canceled debt on the taxpayer’s other tax attributes.
Upon completion of this course, you will be able to:
- Apply information from Form 1099-A, Acquisition or Abandonment of Secured Property, when reporting the foreclosure
- Determine the deemed sale price of the foreclosure property to record the taxation of a deemed sale
- Determine if debt is recourse or nonrecourse
- Identify the date a debt is canceled
- Identify when creditors must issue Form 1099-C, Cancellation of Debt
- Determine if a taxpayer is insolvent
- Complete Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment)
This course includes an e-book and exam questions to help you earn CPE. CPE is issued after the exam is successfully completed.