When you see the foreclosing agent identifying Mortgage Trust Certificate Holders for ABC Mortgage Pass Through Trust Series “00” … Attorneys are liquidating “CORPUS” or Trust stock under CFR 751 for constructive liquidation .
All property sold for ZERO under § 1.751-1 and this is an important devise used for booking a foreclosure as a disposition for all unrealized receivables and inventory items all under the (a) Sale or exchange of interest in a partnership –
(1)Character of amount realized.
Was money or property received by a partner in exchange for all or part of his partnership interest Yes / No
Is the value attributable to your share of the value of partnership unrealized receivables or substantially appreciated inventory items. Yes / No
Is the money or fair market value of the property received Considered as an amount realized from the sale or exchange of property other than a capital asset. Yes / No
If all above are yes then the remainder of the total amount realized on the sale or exchange of the partnership interest is realized from the sale or exchange of a capital asset under section 741.
For definition of “unrealized receivables” and “inventory items which have appreciated substantially in value”, see section 751 (c) and (d). Unrealized receivables and substantially appreciated inventory items are hereafter in this section referred to as “section 751 property”. See paragraph (e) of this section.
Our service is to audit the subject case 1) HUD I statement and tie it out to 2) a judicial foreclosure pleading and 3) servicing statements.
Our objective is simple and we now where to look to find it . We are auditing in search of the “Unrealized receivables and substantially appreciated inventory items” hereafter in this section referred to as “section 751 property”. See paragraph (e) of this section.