Thursday, December 17, 2015

Congressional Stocking Stuffers, Bank Street Scroug, and Mortgage Debt Forgiveness Relief - Bless You

Mr. Ryan has been playing Santa Claus this week in doling out spending provisions and tax incentives.  I didn't know that Santa had such an in with the Federal Reserve and the ability to just continue to print money, but at least a few of these incentives will be a cause of great joy and I expect at least one Hallelujah Chorus will resound from my clients. 

In 2007, which seems like a lifetime ago, maybe even in a galaxy far away from here, Congress enacted a provision under section 108 of the Internal Revenue Code that gives relief to those that received relief from their housing lenders.  Sometimes that relief came in the form of a principal reduction, that happened like three times ever.  The most common way was the house was sold at foreclosure auction or at a short sale and the lender didn't sue the living bejesus out of the now homeless borrower.  Thanks for doing a guy a solid, JP, Wells, BOA, and the rest of you guys!  You are all swell.

As the adage goes, insult to injury, the swell fellas at the bank send out a greeting card of sorts. Its not a Christmas card, but more of a, "hey we foreclosed, and then we ratted you out to the IRS" type card. The 1099-C that comes in the mail in January, maybe February of the following year tells you that you received a cash benefit for them foreclosing your house and not suing you.  Oh, and they send an identical card to the IRS, with all your information on it.  So, the IRS then checks its naughty list and sees if you claim that amount on your 1044 tax return.  If you don't, you get a nice letter saying you owe thousands of dollars in taxes.  Merry Christmas to you in July!

So, back to Mr. Ryan and his stocking stuffer.  The proposed packages that rank in the trillions of dollars, which no average human has any capacity to comprehend (seriously, its like touching the mind of God) includes an extender for the 2007 act.  This means that you can take your 1044 and attach a form 982 and explain that the Bank Scrouged you and that you don't actually have any money from that transaction wherewith to pay any taxes.  The IRS will accept this and you will have Happy Homeless year for 2016. 

So, with these glad tidings I bring, I wish you a Merry Christmas and a Happy New Year.  If you have questions about the content of this blasphemous post, please direct them to me at my office or by email.  God Bless us Everyone!

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