Homeowners are taxpayers first before they are mortgagors and only the mortgagor can fall into default. Auditors who reconstruct the general ledger know that accounting is empirical, it is damning and prima facie to all fact in a matter.
The tax payer is a mortgagor who’s earnings and credit qualified him for financing received on the date shown on the final HUD 1 statement.
The property was sold at closing under the TRANSFER RIGHTS IN PROPERTY by tax deferred exchange
The note was cancelled at 135% of its face value
Cancellation of debt causes the involuntary conversion of title into consideration paid. The sale is tax deferred and recognized but not realized until the year of disposition.
The amount paid at 135 percent of the cancelled note is expensed by an LLC as ordinary and credited back to LLC Directors as a pass through.
THIS MEANS THE HOME IS SOLD AND ITS APPRECIATED VALUE PAID OUT IN 20 SEMI-ANNUAL INSTALLMENTS TO YOU AS WAGES ORDINARY INCOME FOR PROPERTY PLACED INTO SERVICE.
YR SALE ….. 586,300.00
135 PERC …. 791,505.00
12 YRS ….. 205,205.00
PER YR ….. 16,945.09
COUPON ….. 2.890%
Borrowers are by involuntary conversion held to having exchanged title for member bank sponsored investments shares of corpus paid to corporations such as Bank of America or BAC partnerships.
Just how the court can hear the tax matter issues is unknown. The foreclosure courts lack the jurisdiction for determining the type and for what consideration the abandonment is made.
Nor can it hear or decide the matter of ordinary versus capital gains using 12 years of installments versus the same amount carried annually as net operating income . Its generally held to lack jurisdiction to even consider the non nonrecognition rules and requirements in tax deferred series of like kind exchanges where servicing rights are barred and mortgage debt was cancelled
Therefore the court is asked to consider dismissing the foreclosing agent claims hearing the matter of foreclosure that falls under the U S Tax Code section 1033 and CFR 1.751 constructive liquidation of a tax matter partnership interest .