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Second, the Court determined that the amount Mrs. Crane realized from the sale of the "property" should be driven by the conclusion on the first issue. The Court sided with cases repudiating the claim that there must be an actual receipt of money or other property for a taxable gain to result from a transaction.
Commissioner v. Tufts, 461 U.S. 300 (1983), was a unanimous decision by the United States Supreme Court, which held that when a taxpayer sells or disposes of property encumbered by a nonrecourse obligation exceeding the fair market value of the property sold, the Commissioner of Internal Revenue may require him to include in the “amount realized” the outstanding amount of the obligation ...
Amount realized, in US federal income tax law, is defined by section 1001(b) of Internal Revenue Code. It is one of two variables in the formula used to compute gains and losses to determine gross income for income tax purposes. The excess of the amount realized over the adjusted basis is the amount of realized gain (if positive) or realized ...
A foreclosure occurs when a lender takes control over a property from a borrower for failing to make timely payments. A foreclosure can damage your credit score and result in loss of property.
When property burdened by nonrecourse debt is foreclosed upon, there is no cancellation of indebtedness even if the amount of the loan exceeds the fair market value of the property. The case of Commissioner v. Tufts holds that in such a situation, the amount realized is the amount of the debt, and the fair market value of the property is ...
In order to avoid the cumbersome, abrasive, and unpredictable administrative task of valuing assets annually to determine whether their value has appreciated or depreciated, § 1001(a) of the Code defers the tax consequences of a gain or loss in property until it is realized through the "sale or disposition of [the] property."
For example, in Alabama, borrowers have the right for up to one year after foreclosure, while Illinois gives borrowers just 30 days after the sale. Limitations of right of redemption
To determine the broker price opinion, a real estate agent or broker will use their expertise with the local housing market to assign a dollar amount to a property based on certain factors.