Which of the following is accurate regarding a real estate foreclosure transaction? A A foreclosure transaction can never involve recourse debt. B A foreclosure transaction can never involve nonrecoursedebt. C A foreclosure transaction has no federal income taxconsequences for the borrower. D A foreclosure transaction can have significant federalincome tax consequences for the borrower.

Which of the following is accurate regarding a real estate foreclosure transaction? A A foreclosure transaction can never involve recourse debt. B A foreclosure transaction can never involve nonrecoursedebt. C A foreclosure transaction has no federal income taxconsequences for the borrower. D A foreclosure transaction can have significant federalincome tax consequences for the borrower.

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter5: Business Deductions

Section: Chapter Questions

Problem 11BCRQ

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A taxpayer received Form 1099-A with box 5 checked, indicating recourse debt. This informs the tax preparer that: a) There may be taxable income associated with this event. b) There cannot be taxable income associated with this event. c) This document is not reporting cancellation of debt income, so this is not relevant unless a Form 1099-C is also received. d) There can be capital gain from this event, but not ordinary income.
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