Central District Consumer Bankruptcy Attorney's Association

In a message dated 2/26/2010 11:00:09 P.M. Pacific Standard Time,
robert90701@aol.com writes:
Dear Axel:
First, is it a C7 or C13? The facts are silent on it.
In C13, then needs court permission to sell it, no COD income, and as Marksays
their could be a CG.
In C7 debtor cannot sell the property since property of the estate.
Trustee sells it.
The property is now part of the bankruptcy estate. No COD income in bk
and the gain or loss
is recognized by the bk estate. The problem may be that the bk estate
abandons the property
and it is foreclosed on. Then the debtor has a tax problem as described
by Mark.
Good Luck starts with a strategy and a plan. Form a strategic alliance
with
Robert J. Suhajda, MS,CPA
17721 Norwalk Blvd. #43
Artesia, CA 90701
562-924-8922
Income Tax for Attorneys, Bankruptcy, IRS representation,
Fiduciary income tax returns, Estate and Gift tax returns,Trust
Protector, Independent Trustee, Court Accountings
In a message dated 2/26/2010 4:08:46 P.M. Pacific Standard Time,
mjessee@jesseelaw.In a messag
Stating an intention to surrender in the statement of intentions is not actually surrending the property. With real property title must change or it
still belongs to the debtor's estate. With a second from another lender
on the property the first lender will no likely accept a deed in lieu of
foreclosure. The debt will be discharged in the bankruptcy regardless of whe
ther the property is later sold by the debtor. The tax attributes issue
could be a problem depending on if the sale takes place in a later year. Otherwise the more significant issue is capital gains tax if your client
bought the property back when prices were low and refinanced as values
increased. The basis for determining gain or loss is the amount for which the
debtor bought the property, plus improvement costs and subtracting the
accumulated depareciation since it became a rental property after purchase. In
that instance your client actually wants the property to sell for as little as possible, to minimize and taxes that will be due or better yet sell
while the bankruptcy case is still open so the gain goes to the estate. This
is a topic upon which Dennis McGoldrick has opined many a time. For
example: Bought in 1992 for $300,000, $50,000 remodling expense in 1999, minus
18 years of depreciation equalling x thousands. Basis is $350,000 minus xthousands depreciation. Property refied several times and now owe
$725,000 first and $175,000 second. Property worth $700,00.00. Short sale nets
$700,000 after costs of sale. Accordingly captial gain is $350,000 + x
thousand depreciation previously taken. That gain is subject to taxation for
the debtor if Chapter 7 case is closed or to the estate if estate is stillopen.
If not already coordinating with debtor's tax accountant, need to bring
the accountant in on the analysis and if there is a gain do everything
possible to keep the case open and sell property through short sale.
Mark T. Jessee
Law Offices of Mark T. Jessee
"A Debt Relief Agency"
50 W. Hillcrest Drive, Suite 200
Thousand Oaks, CA 91360
(805) 497-5868
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On Fri 26/02/10 3:30 PM , axel richter arichterlaw@On Fri 26/02/10
dear clleagues
3 month ago my client surrendered a rental property in his BK, the
mortgage company has not respondered with a MFR, and there is an unsecured2nd,however my client and my office gets inundated with a real estate company
trying to pressure my client into a short sale of the surrendeed property,my opimnion is NOT to short sale, I reason, a short sale during BK would
create a new debt of under forgiveness of debt after debtor signs doc's for
short sale and as such would probaly not be dischargeable as pre petitiondebt, not to mention possibly a 1099, (right? wrong?) especially this is arental property,
if any of you had experience in this matter, please let me hear or see
your comments
thank you, (this is actually an issue that may occur with your clients)
axel


In a message dated 2/26/2010 11:00:09 P.M. Pacific Standard Time,
robert90701@aol.com writes:



Dear Axel:

First, is it a C7 or C13? The facts are silent on it.


In C13, then needs court permission to sell it, no COD income, and as
Mark says
their could be a CG.

In C7 debtor cannot sell the property since property of the
estate. Trustee sells it.
The property is now part of the bankruptcy estate. No COD income in
bk and the gain or loss
is recognized by the bk estate. The problem may be that the bk estate abandons the property
and it is foreclosed on. Then the debtor has a tax problem as described by Mark.



Good Luck
starts with a strategy and a plan. Form a strategic
alliance with

Robert J.
Suhajda, MS,CPA
17721 Norwalk Blvd.
#43
Artesia,
CA

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