Wednesday, June 8, 2011

What Your Accountant Will Need For a Tax Analysis

Whether it is a short sale, trustee's sale or other conveyance of your underwater property, your accountant and attorney will need many of the items below in order to calculate the tax effects of the transfer. The calculation can be fairly simple or extremely complex depending on the circumstances. It will likely save you money to have this information assembled before you discuss taxes with your advisor.

A. Lot size, description, and location of the property.
B. How the property was titled, and the parties to the related notes.
C. Dates of property use and changes of use.
D. Cost of the property and improvements, and adjusted basis after tax depreciation.
E. How the property was financed, and possibly refinanced, and use of proceeds.
F. Determine if the loans were VA, FHA, HUD, conventional, or carryback notes.
G. Determine if the terms of the note or federal/state law limits borrower’s liability.
H. Nature of property in hands of owner (primary residence, second home, rental, non-rental, investment property, or inventory).
I. Determine if there was waste committed by the owner, or fraud used to obtain financing.
J. Terms of conveyance of the distressed property.
K. Lien priority of secured lenders.
L. Determine if the property owner is or will be filing for bankruptcy protection.
M. Determine statute of limitations on enforcement of obligations.
N. Value of borrower’s assets and liabilities immediately before all planned conveyances.
O. Determine the other taxable income and deductions of the debtor for the period in question, including carryovers of suspended losses, net operating losses, and capital losses.
P. Obtain copies of any 1099-C and 1099-A forms issued in relation to the loans.

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