Mobile Home Foreclosure/Repossession Issue ?
Mobile Home Foreclosure/Repossession Issue?
I have been preparing taxes for my cousin who had his mobile
home repossessed in 2001. He received a 1099-A form showing
the principal loan balance (for example $25,000) exceeding
the FMV of the property (for example $15,000).
The trailer was repossessed and sold for substantially less
than the loan amount. Also, my cousin was responsible for
repayment of the debt. (Recourse Loan)
The collection agency is still trying to collect the $10,000
difference between the amount they sold the trailer for
($15,000)and the loan amount ($25,000).
Therefore, I assume the debt is not yet cancelled because of
this.
What are the tax implications at this point since the debt
has not officially been cancelled yet?
I know if the debt is cancelled (1009-C) then I would have
to report the difference of $10,000 as Other Income, and the
gain or loss on the sale of the trailer would not be
reportable because the loan is a recourse loan.
You already answered your own question. The debt hasn't
been forgiven. No tax implications here.I agree with all your points. Nothing to do unless/until
they cancel the debt. Don't hold your breath:-)