Special Thanks to  Wikipedia and ACFE , Members sinse 2014

COD Income
Whether or not there is cancellation of indebtedness income can sometimes be ambiguous and controversial. In Commissioner v. Rail Joint Co.,[10] a corporation issued its own bonds as a dividend to its shareholders. When the bonds declined in value, Rail Joint repurchased them for less than their face amount. Ordinarily, retiring bonds for less than the issue price would result in taxable canceled debt. However, in holding that there was no COD for Rail Joint, the court noted that, unlike in a normal issuance of corporate debt for cash consideration, the original issuance of these bonds as dividends did not increase the capital of the corporation and did not create burdened assets to be later freed by the cancellation.

The IRS has formally non-acquiesced to the Rail Joint doctrine, arguing that what really happens in these situations is a constructive dividend and purchase: The corporation constructively issues a cash dividend to shareholders, who then contribute that cash back to the corporation in exchange for the bonds; the burdened asset is thus the constructively re-contributed cash. Rail Joint is nonetheless good law, and has been expanded to encompass other situations where the taxpayer received nothing of value in exchange for the debt, such as when a guarantor of a loan who did not enjoy the benefit of the loan settles it for less than the face amount.

Nonrecourse debt
Whether secured debt is recourse or nonrecourse can have significant consequences if the debt is settled in foreclosure of the secured property.[citation needed] Generally, while the net gain or loss is the same regardless of the classification of the debt (it will always be the difference between the basis of the burdened property and the amount of the debt), there are potentially huge tax differences.

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 irrelevant. That this difference between the adjusted basis of the property and the amount of the debt is simple gain rather than COD has potential upsides and downsides. On the one hand, the gain would be capital gain assuming the property foreclosed upon were a capital asset, unlike COD which is ordinary. On the other hand, COD is potentially excludable, as by insolvency (see below).

If the same property had been burdened by recourse debt, and, as above, that property were foreclosed upon in full satisfaction of the debt, you would get a different result. The gain or loss would be determined with reference to the fair market value of the property, and the difference between the fair market value and the debt would be COD. (This intuitively makes sense because with recourse debt, any cancellation of the outstanding balance of the debt, after it has been satisfied to the extent of the FMV of the property given up, really is a termination of personal liability to pay that amount, unlike in a situation where the debt is nonrecourse). If the property has a value lower than its basis, then in the case of recourse debt you could get a capital loss and COD ordinary income on the same transaction, netting to the same dollar figure as with nonrecourse debt but potentially much worse for the taxpayer: The taxpayer would not only be burdened with ordinary rather than potentially capital gains, but may have more total income to report, offset only by a capital loss that would be unusable (except to a nominal extent in the case of individuals) if the taxpayer had no other capital transactions for the year. Only in the case of a taxpayer able to utilize one of the COD exclusions, such as insolvency, could this result be better.

Disputed Debt Doctrine
The Disputed Debt Doctrine (also known as the Contested Liability Doctrine), is yet another exception to including COD income in gross income.[11] This doctrine can be found in a Third Circuit Court of Appeals case, Zarin v. Commissioner.[12] In order for this exception to apply, the amount of debt must actually be disputed. This can happen if the two parties actually have a good faith dispute over the amount owed. A written instrument containing the amount of debt will probably not satisfy this requirement. However, as the court decided in Zarin, the Disputed Debt Doctrine can also apply if the debt is not legally enforceable.[13]



1099 C NOTICE – This is important information and being furnished to the IRS .

If you are required to file a return a negligence penalty or other sanction may be imposed on you if taxable income results from this transaction and the IRS determines it has not been reported

Now we attack the foreclosure

If you own stock  (ATM LLC) that became worthless last year. Is this a bad debt? How do I report my loss?

Answer: If you own securities, including stocks, and they become totally worthless, you have a capital loss but not a deduction for bad debt. Worthless securities also include securities that you abandon. To abandon a security, you must permanently surrender and relinquish all rights in the security and receive no consideration in exchange for it.

Treat worthless securities as though they were capital assets sold or exchanged on the last day of the tax year. You must determine the holding period to determine if the capital loss is short term (one year or less) or long term (more than one year).
Report worthless securities on Form 8949, Part I or Part II, whichever applies. Indicate as a worthless security deduction by writing Worthless in the applicable column of Form 8949.

Additional Information:
– Tax Topic 453 – Bad Debt Deduction
– Publication 550, Investment Income and Expenses (Including Capital Gains and Losses)
– Losses (Homes, Stocks, Other Property)
– Category:
– Capital Gains, Losses, and Sale of Home

See the IRS website for more information

It’s a tax matter issue for God’s sake



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COME NOW THE AUDITOR AS EXPERT engaged by DEFENDANT __________________, making a special appearance in the above entitled matter for the Defendant “Upper Case” entity  who files in motion the following order to dismiss:

Whereas the court to date has heard arguments for Plaintiffs/ purported creditors request to enforce its power of sale under the Case number 2016 CA -009109 in District of Columbia Superior Court filed by petitioners on 12/15/16 and entered onto docket on 12/16/2016 and where such was entered as of the 11 year anniversary of the  contracts orgination

Defendant for above entitled case files this request in motion seeking DISMISSAL and to strike earlier order for summary judgement granting the anticipated sale scheduled for 9-11-2017 AND 5-11-2018 as follows:

Discovery revealed the court erred in order granting sale for interest sold in an abusive tax matter partnership whereas the instrument the plaintiffs enforces is affirmed a transfer instrument “SECURITY DEED” for TRANSFER OF RIGHTS IN “THE” PROPERTY.

Therein the instrument states “… For this purpose, Borrower does hereby mortgage, grant and convey to Lender, with power of sale, the following described property . . .

Furthermore, it states as BORROWER COVENANTS “. . . . that Borrower is lawfully seized of the estate meaning always named herein for purposes known or unknown, conveyed and has the right to mortgage, grant and convey the Property and that the Property is unencumbered, except for encumbrances of record.” .

Petitioning party pursues the title conveyed into trust to a fiduciary as trustee as tax deferred transfer and sale  for contracts TRANSFER RIGHTS IN PROPERTY whereas the election for the cancellation of debt resulted and is causal to the involuntary conversion of title.

Borrower as of the date shown _______ and no later than _______transferred title in a tax deferred sale by tax code and rules in part found in  sections 1033 and 1031 deferred exchanges as consideration causal  to such  EXCHANGE FOR THE CANCELLATION OF DEBT AND THE INVOLUNTARY CONVERSION OF TITLE TO DEPOSITS

LET THIS COURT CONSIDER THE MATTER OF REVERSE ROLES where a mortgagee is by its own election the obligor to the Payee as the consumer  who inoperative law is established a creditor

COD Income – The creditor converted to a OBLIGOR , and fiduciary holding dominion over all title and thereupon can mortgage, then grant and convey, with power of sale the described property therein a series of events described as from the time the property is placed into service starting as of 04/01/2010

Mortgagor converts to a Payee for receivables held in 26 US COde sections 61 (a) (1) and 108 (i) sections 1031 and 1033; 1038 and thus is the recognized creditor in the transaction lender exists the transaction as a recorded bonafide sale by constructive liquidation .





Take a second look and you will find that is not a foreclosure trustee. That  is an agent for Uncle Sam appointed under the color and badge of authority.

The trustee or referee are called government collateral agents  or “Agent to Principal” – the instrumentality of the United States Government  pursuant to R&T 11926

What’s a princicpal ? An officer or director of a major member bank.

So whats this all mean?

Well for starters it does not look like a foreclosure to me !  Its the taking of title where you perhaps should have known. Therefore you abandoned all claims by alleging fraud .  In other words you  lost your rights to condemnation proceeds  FHLMC CODES

My take is you were not a mortgagor but a transferor made into an accredited investor pursuant to R&T 11926 under a state by state uniform instrument  .


Foreclosure Substantiation Information

THE COURT IS REQUESTED TO COMPEL DISCOVERY believed held by plaintiff and or plaintiffs attorney. The foreclosure bought is neither a conventional mortage foreclosure nor of the variety that is described in the state civil code of procedures.

Defendants have reason to believe and from discovery to date state as fact that a recovery of this type with respect to acquiring entity and transferor for mergers and acquisitions by acquiree must retain Substantiation Information.pursuant to the IRS Under §1.6001–1(e), taxpayers are required to retain their permanent records and make such records available to any authorized Internal Revenue Service officers and employees. In connection with the reorganization described in this section, these records should specifically include information regarding the amount, basis, and fair market Mar<15>2010 19:27 May 29, 2013

Furthermore the court cannot proceed nor decide this civl matter barring judicial review of § 1.381(a)–1 26 CFR Ch. I (4–1–13 Edition) value of all transferred property, and relevant facts regarding any liabilities assumed or extinguished as part of
such reorganization. (e) Effective/applicability date. This
section applies to any taxable year beginning on or after May 30, 2006. However, taxpayers may apply this section to any original Federal income tax return (including any amended return filed on or before the due date (including extensions) of such original return) timely filed on or after May 30, 2006.
For taxable years beginning before May 30, 2006, see §1.368–3 as contained in 26 CFR part 1 in effect on April 1,

Petitioning parities shall be barred from further delay, postponement and all argument denying the defendant’s right to discovery Therefore such demand are made pursuant to financial tax payer information related to the above entitled case and referenced operative laws as cited herein


Under §1038. Certain reacquisitions of real property we find (a) General rule
If a sale of real property gives rise to indebtedness to the seller which is secured by the real property sold, and the seller of such property reacquires such property in partial or full satisfaction of such indebtedness.

Define- under operative law a repurchase is where you home is bought back upon which the sale triggers a debt .

  • You owed nothing as a renter
  • because you owned nothing under a leasehold esate.

You financed the sale of your home to the buyer at foreclosure sale.

The IRS looks at your demographic that includes where you live what you should earn and what you pay as taxes assuming you even filed.

If you cannot support the cost of living for your neighborhood by way of “other” non taxable income (inheritance) your lender gave you 12 years to start packing . Its called the Legacy loan and sale of your home to satisfy your back taxes.

500,000.00 Mortgage
0.05 percent  Rate
25,000.00 Annual debt service

55,555.56 Minimum Income
12 Yrs
666,666.67 over 12 years = Foreclosure
0.75 LTV  Loan to value
500,000.00 Disposable income =Mortgage

Read before you bleed – You need the facts to prevail in a wrongful foreclosure!

Foreclosures , like-kind exchanges and involuntary conversions

The forgoing are substantive corporate tax payer rules for earning lucrative tax credits in each foreclosure. The Treasury code or certain dates and numbers seem to be aligned with key timing devises and this is believed to give the insiders the edge in courts across America

With understanding both parties in a court case are fighting to prevail then assume if the consumer rob’s the foreclosing parties of the foregoing  he will remove any least interest in proceeding meaning holding onto your  foreclosed property .

The tax and loss of benefits is otherwise  too great!  For example , if a taxpayer did not claim on a federal tax return for any taxable year ending after September 11th, 2001 and on or before September 8, 2003, the additional first year depreciation deduction allowable for the remaining carryover basis of qualified property or 50-percent bonus depreciation property acquired in a transaction described in section 1031(a), (b), or (c), or in a transaction to which section 1033 applies

Additionally the taxpayer did not make an election not to deduct the additional first year depreciation deduction for the class of property applicable to the remaining carryover basis, the taxpayer may claim the additional first year depreciation deduction allowable for the remaining carryover basis in accordance with paragraph (f)(5) of this section.

What is the significance of these complex tax rules dating back to … 911 ? 

  • From 10-19-87 to 9-11-2001  . .  . Starting with Black Monday
  • From 9-11-2001 to 5-11-2018 . . . .Starting with 9-11
  • From 5-11-2018 to 7-8-2015 . . .  .Starting with 5-11 Dodd Frank sunset

From 5-11-2018 back 1038 days to the morning the NYSE Computers closed down the markets?

Follow the codes friend . . . follow the  codes  ! Such as §1038. Certain reacquisitions of real property (a) General rule is If- (1) a sale of real property gives rise to indebtedness to the seller which is secured by the real property sold, and (2) the seller of such property reacquires such property in partial or full satisfaction of such indebtedness, then, except as provided in subsections (b) and (d), no gain or loss shall result to the seller from such reacquisition, and no debt shall become worthless or partially worthless as a result of such reacquisition.

A series of transaction leading to requisition and resulting from series of like-kind exchanges is by law causal to and involuntary conversions. Get It?

You NEVER owned your home !

  • Auditors/ Accountants

AUDITOR FINDINGS -insider trading on loan numbers ?

We ask the question …”how can a loan number INSIDER CODE reveal the Dodd Frank Cut off date of 5-11-2018 if the market had not yet crashed ?” Well here it is and it’s true.

The findings from a March 15th 2018 audit of the borrower’s file indicates  the 5-11-2018 legislation expiration is a short sellers mark . The audit picked up the date which appears used by insiders privy to alleged concealed loan numbering timing constraint.

The loan numbers have been suspected to hold more than  meets the eye according to SECONDARY  whole loan foreclosure auditors .  Concealment will tilt the scales with respect to a notional value – the total net amount of a derivative transaction, usually an interest rate swap, a forward contract, a cross currency swap or an options contract.

Here the loan number 2503134008 reveals a willful effort to gain advantage using a  numeric code system designed by insiders as far back as 2005.  The loan number is valued at 40 years prepaid interest that runs from the date of the loans closing to Dodd Frank sunset 5-11-2018.

Is this another example of the Y-2K warnings?

You be the judge!

Loan number 2503134008

Preferred – 25.00
Common-  833.33
Bond- 10,833.33
Balance Out- 433,333.33
Installments – 34,666.67
Years – 12.5
Per Annum – 366
No of days- 4575
Mortgage Date – 10/31/2005
End Date-  5/11/2018


for more information


Chapter 13 – Cancellation of Debt & Involuntary Conversion [Not intended as a legal opinion]


Dear US Trustee

In Chapter 13 bankruptcy, the United States Trustee supervises the private trustees who administer Chapter 13 cases. In this chapter, the trustee does not liquidate the debtor’s assets, but instead evaluates the debtor’s financial affairs and makes recommendations to the court regarding the debtor’s proposed repayment plan.

A Chapter 13 debtor must propose a plan that devotes all disposable income to debt repayment over a period of up to five years. Most Chapter 13 cases are administered by “standing trustees” appointed by the United States Trustee to administer all cases filed in a particular geographic area.

In my case I am asking the US Trustee to intervene and affirm or formally reject the evidence obtained to date that clearly shows a back dating scheme under the US governments stern warning about Y2 K and 26 US Code section 61 consideration .

In the cancellation of debt is the involuntary conversion of title to land under a utilities, gas or other energy 99 year leasehold schedule. The attribution falls under section 61 is the attribution of ordinary income that is either paid or owed to the filing party in Ch 13

The inability or neglect with regards to addressing COD Income and sec 108 accelerated recovery as discovered in this case is not an option. Attribution by direct investment is subject to forfeiture that may or may not be cause for abandonment and 1099 A issued by foreclosing entity.

Please see attached SPS Statements


Mr. BK Filer