D.F. Its coming you way on 5/11/2018

Dodd Frank Act Section 1063
SEC. 1063. SAVINGS PROVISIONS.

(a) BOARD OF GOVERNORS.—

(1) EXISTING RIGHTS, DUTIES, AND OBLIGATIONS NOT AFFECTED.—Section 1061(b)(1) does not affect the validity of any right, duty, or obligation of the United States, the Board of Governors (or any Federal reserve bank), or any other person that—

(A) arises under any provision of law relating to any consumer financial protection function of the Board of Governors transferred to the Bureau by this title; and

(B) existed on the day before the designated transfer date.

(2) CONTINUATION OF SUITS.—No provision of this Act shall abate any proceeding commenced by or against the Board of Governors (or any Federal reserve bank) before the designated transfer date with respect to any consumer financial protection function of the Board of Governors (or any Federal reserve bank) transferred to the Bureau by this title, except that the Bureau, subject to sections 1024, 1025, and 1026, shall be substituted for the Board of Governors (or Federal reserve bank) as a party to any such proceeding as of the designated transfer date.

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Do not confuse the Lender and Creditors Claims

logo-cert-cfeWhen a mortgage funds the process causes the notes holder to ship its collateral “note” to the creditor meaning the bank wiring good funds into closing. The funds originate from a member bank in the name of the lender F.B.O the mortgagor. The amount wired is the obligation of the lender to creditor where the notes maker or mortgagor owes a debt to the lender as legal holder.
Holder therefore is the lender to mortgagor and the obligor to creditor a member bank .

If the lender sold the loan the purchaser is in possession of the instrument “note” evidencing the obligation. If the lender did not sell the loan by 180 days the note remains with the creditor . First Horizon is the Lender and Bear Sterns is the Creditor for lines of Credit used to fund the subject mortgage.

At 180 days but no greater than 360 days there must be a valid assignment from Lender to  a thrid party purchaser for value.

If the assignment is not from Lender to bonefide purchaser than Creditor takes assignment by its possession of the collateral it has held all along.

A corporate assignment from Lender to Creditor collateralize s the revolving lines of credit issued to lender but otherwise are worthless. The corporate assignment from Lender to :___________ and blank endorsement  never serves any other purpose.

MERS is the nominee only for the term the loan is out for sale or first 12 months and is used to replace the Seller Purchaser bailment requirements.

Take this to court or take it to the bank as fact .

We are secondary markets auditors and accountants who do not offer free home services…just facts in the secondary and capital markets handling of these legacy loans in foreclosure. The fact is in every case seen to date the debt  in controversy is NOT the consumers but the antecedent debt of a thrid party  involving the creditors and lenders .

expert.witness@live.com

Washington Office / Tel 202-550-8364

What You’re Missing in a Foreclosure Defense is the Foreclosure!

General Taxation of COD Income

Under the Code, U.S. persons, including corporations, are taxed on their worldwide income. Sec. 61 defines gross income to include COD income.

When a debtor recognizes COD income, the creditor may receive a corresponding Sec. 165(g) worthless securities deduction or a Sec. 166 bad debt deduction.

What does this mean ? You are sent a 1099 A for Abandonment of claims meaning the cost to charge off bad debt the lender owed its creditor and never satisfied .

Problems arise where the HUD shows the amount owed the existing lines of record were in fact paid.  The second issue is where the amount paid by borrower was never wired into closing …  or funds were rerouted into a bank depository as trust funds used to acquire a series of pass through certificates.

In either event your left holding the bag for the amount owed by the lender to the foreclosing party, the amount that failed to wire to the existing lien holders and loss of title that was irrevocably conveyed after closing

Sec. 108 provides several exceptions to the definition of COD income. For example, Sec. 108(e)(6) provides that a capital contribution [meaning homes and mortgages for stock ] issued by banks in the form of debt forgiveness by LLC officers and directors as shareholder-creditor that generally does not involve an issuance of stock of the debtor produces COD income only to the extent the outstanding debt exceeds the contributing shareholder’s adjusted tax basis in the debt.

More importantly under Sec. 108(e)(8), a member bank as Chase a Delaware Corporation recognizes COD income if it transfers stock in satisfaction of its debt….MEANING YOU PURCHASED THEIR WORTHLESS SHARES BY CONVEYING YOUR HOME and at that time A MORTGAGE WAS CANCELLED AS  IF IT WAS PAID IN FULL SATISFACTION.

CLAIMS BROUGHT BY LAWYERS IN CONSUMERS DEFENSES ARE …lets say off base and not on target. Its true the fair market value (FMV) of the stock will always be less than the adjusted issue price of the debt.

Thus, when mortgages are forgiven by a banks officer and directors shareholder-creditor and no new stock is issued, the consumer debtor recognizes gain to the extent the adjusted issue price of the debt exceeds the shareholder-creditor’s basis in the debt.

The shareholder-creditor increases its basis in the stock of the debtor in an amount equal to the adjusted issue price of the debt (see also Sec. 1016(a)(1), Regs. Sec. 1.1502-19(d)(1), and Letter Ruling 201337007).

More to follow so please stay tuned – difficult subject matter is tough to digest when its valuable to your claim. expert.witness@live.com

 

Facebook Foreclosures, Nominee and IRS

You will find quite a crowd on Facebook these days conversing on topics ranging from foreclosure fraud to how to burn the Department of  Treasury for a lifetime membership  to unlimited wealth . Unfortunately the Treasury crowd cant differentiate welfare from stealing but they often make more sense these days than the foreclosures bottom feeders.

Seriously if the Department of Treasury wanted to ensure your wealth  they would publish a manual on just how to break into their electronic platform and describe in government fashion the method for whatever it is these folks converse about. I am more  in favor of playing 52 card pick up on the freeway or riding unicycles on tall buildings balancing off the most extreme ledges.

There is an argument for the foreclosure victims and its a difficult argument to get across conservative folks who are timely or current and those who are facing loss and eviction after years of sleepless nights.

LOST NOTE v. LOST NOTES: The note is lost and its fact but not to be confused with lack of willingness to  locate the instrument  as compared to a lack of capacity to enforce it. If you agreed to a mortage in good faith and executed  the note you  promised to pay back the money. The majority of mainstream Americans would agree with the courts as that is all the judicious appears willing to go off.   Nothing  in effect will deny an Innocent third party purchaser the  right to enforce the note he purchased. Even in the event of a default and strong counter claims to deny standing should a foreclosing party enter the court absent the note.

The note under the Legacy Brand mortage was not lost to anything incident to volume of industry shake up after the markets tanked. The note was cashed in by the purchaser who in this case is the seller.  Its called divestiture of assets and cancellation of debt for the involuntary conversion of the instrument and obligation into ordinary income .

Ordinary income is taxable In the United States at the marginal tax rates. Generally there are six “tax brackets” ranging from 10% to 35%.  However, after the 2003 Tax Cut, qualified dividends and long-term capital gains are taxed at the same rate of 15% (up to 20% after 2012). The amount withheld in certain instances can run as high as 39.4 percent of the amount paid to the tax payer.

Here is where a genuine controversy arises that  that fails to enter into counterclaims nor attention of the press or lawyers on both sides. Mortgages transfer title and the note cancelled for its full value paid over 30 years under sec 108 (i) accelerated recovery. This beg the question of why? Why would anyone make a bad loan as lenders did from 2001-2008  placing money at risk and then right it off . Add to the confusion why the lender allowed the consumer to stay in the  home  for more than five years from the day of the alleged default?

INSTALLMENT SALES – Under the requirements  of Section 453 B a tax payer lender or its successors can claim benefits of installment sale reporting  under installment sale rules. Those benefits are in the booking of phantom income  attributed to a faulted household  capitalized at 10 times the note face value.

In my professional opinion this entire mortage  crisis is due in part to the federal deficit reduction  act and 911 and includes member banks recpatuire due the IRS dating back to 10/19/87

Consider MERS for example where a “nominee” is someone designated to act for another. As used in the federal tax lien context, a nominee is generally a third-party individual who holds legal title to property of a taxpayer while the taxpayer enjoys full use and benefit of that property. In other words, the federal tax lien extends to property “actually” owned by the taxpayer even though a third party holds “legal” title to the property as nominee.

Generally speaking, the third party in a nominee situation will be either another individual or a trust.

More to report here  over the coming days !

 

 

 

 

 

Indebtedness to the seller not discharged at reacquisition , the basis of such indebtedness shall be zero!

THERE WAS NO MORTGAGE ORIGINATED AS YOU THINK/ Installment Sale. And in most every case we have seen the consumer is foreclosing on themselves. Under the operative tax payer code  If any indebtedness to the seller secured by such property is not discharged upon the reacquisition of such property, the basis of such indebtedness shall be zero.

(d) Indebtedness treated as worthless prior to reacquisition

The cause for your belief in fraud is because foreclosing attorneys rely on a computer systems to track back to a date prior to the loan origination . This is for an adjusted basis in asset .

The Y2 K Bug is so hidden and veiled, clandestine that there is NO CHANCE OF DISCOVERY

You need to have complete understanding of GAAP AND GAAS and alleged  reacquisition of real property with respect to the sale of which gain was not recognized under section 121 (relating to gain on sale of principal residence);

Then you need complete understanding of Sec 1038 [cite the mortage foreclosure and eviction is moot to the taxpayers claims in Sec 121 ]

Now read this for the bigger picture –Basis of reacquired real property.

In Sec 1038 (d) If subsection (a) applies to the reacquisition of any real property, the basis of such property upon such reacquisition shall be the adjusted basis of the indebtedness to the seller secured by such property (determined as of the date of reacquisition), increased by the sum of—
(1) the amount of the gain determined under subsection (b) resulting from such reacquisition, and
(2) the amount described in subsection (b)(2)(B).

If any indebtedness to the seller secured by such property is not discharged upon the reacquisition of such property, the basis of such indebtedness shall be zero.
(d) Indebtedness treated as worthless prior to reacquisition. If, prior to a reacquisition of real property to which subsection (a) applies, the seller has treated indebtedness secured by such property as having become worthless or partially worthless—
(1) such seller shall be considered as receiving, upon the reacquisition of such property, an amount equal to the amount of such indebtedness treated by him as having become worthless, and
(2) the adjusted basis of such indebtedness shall be increased (as of the date of reacquisition) by an amount equal to the amount so considered as received by such seller.
(e) Principal residences. If—
(1) subsection (a) applies to a reacquisition of real property with respect to the sale of which gain was not recognized under section 121 (relating to gain on sale of principal residence); and
(2) within 1 year after the date of the reacquisition of such property by the seller, such property is resold by him, then, under regulations prescribed by the Secretary,
subsections (b), (c), and (d) of this section shall not apply to the reacquisition of such property and, for purposes of applying section 121, the resale of such property shall be treated as a part of the transaction constituting the original sale of such property
(f) [Deleted]
(g) Acquisition by estate, etc., of seller. Under regulations prescribed by the Secretary, if an installment obligation is indebtedness to the seller which is described in subsection (a), and if such obligation is, in the hands of the taxpayer, an obligation with respect to which section 691(a)(4)(B) applies, then—
(1) for purposes of subsection (a), acquisition of real property by the taxpayer shall be treated as reacquisition by the seller, and
(2) the basis of the real property acquired by the taxpayer shall be increased by an amount e qual to the deduction under section 691(c) which would (but for this subsection) have been allowable to the taxpayer with respect to the gain on the exchange of the obligation for the real property.

MOTION TO SET ASIDE FORECLOSURE FOR GENERAL LEDGER WITHHOLDING AND TAX PAYER ACCOUNTING RULES

IN THE CIRCUIT COURT FOR
Plaintiff,
v.
ABC MORTGAGE

MOTION TO VACATE FORECLOSURE,
COMPLAINT FOR EQUITABLE DAMAGES, PUNITIVE DAMAGES, AND REQUEST FOR EMERGENCY INJUNCTIVE RELIEF
I. NATURE OF THE MOTION
1. Plaintiff is moving party _________________ “MOUVANT” who resides at _______________ in the county of ____________ for the state of ________________ files ex parte motion to “stay” scheduled unlawful detainer and eviction of occupant from the premises and above identified property.

POSSESSION FAILS UNDER § TAX PAYER I.R.C. SECTIONS (4–1–14 EDITION) VOLUNTARY CONVEYANCE

From the Purchaser and Abandonment to the Seller.

Come now moving party “MOUVANT” citing lack of court jurisdiction in Personaum for matter of “REM” condemnation and government and state right of possession by” threat or emenanance” under counter argument in IRS tax Payer Code and IRS Taxpayer Bill of Rights as “adopted” by National Taxpayer Advocate.

Motion to stay eviction cite a genuine tax payer conflict of law that arises under the protections afforded in the fifth and fourteenth amendments and with respect of taxpayers rights under the disguised FEDERAL DEBT COLLECTORS PROCEDURES ACT “FCPA” with respect to “APPOINTED AGENTS” ALL MATERIAL DISCLOSURES AND NOTICES UNDER THE SATES CODE which shall but do not include the very basic presentment of payroll and earnings and disclosure for general ledger income assets liabilities and expenses.

In possession the right to prerequisite withholding held in a tax payers “interest bearing account remain unaffected by foreclosure or fictitious sale upon which a “lender is a vendor and vendee is the NOMINEE and upon the assignment thereof to “PAYOR” for consideration owed and never recived by the Borrower as PAYEE.

Under cancellation of debt and involuntary conversion borrower and BORROWER DOES 1-10 are the PAYEE for obligations due the Internal Revenue Service for ordinary as a RENTER OR LESSOR but denied the mandatory withholding data where nominee is a LANDLORD LESSEE “PAYOR” for income phantom or otherwise “ORDINARY” but deemed a tax deferred “fiction” Herein the moving parties cite where the courts practice and procedures for holdover and unlawful detainer are strategically timed and calendered in court dockets to circumvent US Tax payer codes for state and member bank obligations where the proceedings collectively avoid general tax payer withholding in favor of the state levying and collecting a punitive tax at time of possession.

*** The entire case pleading and motion is available by request upon our engagement providing discovery for 1099 , withholding information from constructing the general ledger for your case.
NOT AN OFFER FOR LEGAL ADVICE AND FOR INFORMATIONAL PURPOSES ONLY .
****** Sorry fee based service and not for free ****

“Linda Tirelli robo signer and Steve M ”

“Linda Tirelli robo signer” and you’ll find no less than eight hundred and forty hits highlighting my work as a consumer advocate exposing the fraud that is robo-signing and document fabrication.

That is the problem with false prophets and morons acting like foreclosure scribes. A Robo signor is anyone in the mortage bankers office with  a blanket POA allowed to sign a corporate officer’s name for purposes of the assignment and  blank endorsement. The instrument is for all  purposes and intent worthless as they are provided in file exclusive to the  Creditor.

Creditor not lender is the holder and in possession of the asset

Lenders originate loans and  commercial lenders  fund the mortgages which must be sold at 180 days. The ROBO signed document is valueless after the first 180 days and this is what we as experts want to get in front of the court for you .

Why is the court interested in hearing the assignment is valueless  as a staled date  instrument . Because the  foreclosing agents are using it as a tool to unwind loans  under a reverse purchase and sale scheme

For more info write us at  registerclaims@live.com

Installment Sale v. Mortgage as defined for purposes of 26 U.S. Code § 453 –

(a) General rule-Except as otherwise provided in this section, income from an installment sale shall be taken into account for purposes of this title under the installment method.
(b) Installment sale defined For purposes of this section—
(1) In general The term “installment sale” means a disposition of property where at least 1 payment is to be received after the close of the taxable year in which the disposition occurs.
(2) ExceptionsThe term “installment sale” does not include—
(A) Dealer dispositions
Any dealer disposition (as defined in subsection (l)).
(B) Inventories of personal property
A disposition of personal property of a kind which is required to be included in the inventory of the taxpayer if on hand at the close of the taxable year.
(c) Installment method defined
For purposes of this section, the term “installment method” means a method under which the income recognized for any taxable year from a disposition is that proportion of the payments received in that year which the gross profit (realized or to be realized when payment is completed) bears to the total contract price.
(d) Election out
(1) In general
Subsection (a) shall not apply to any disposition if the taxpayer elects to have subsection (a) not apply to such disposition.
(2) Time and manner for making election
Except as otherwise provided by regulations, an election under paragraph (1) with respect to a disposition may be made only on or before the due date prescribed by law (including extensions) for filing the taxpayer’s return of the tax imposed by this chapter for the taxable year in which the disposition occurs. Such an election shall be made in the manner prescribed by regulations.
(3) Election revocable only with consent
An election under paragraph (1) with respect to any disposition may be revoked only with the consent of the Secretary.
(e) Second dispositions by related persons
(1) In generalIf—
(A) any person disposes of property to a related person (hereinafter in this subsection referred to as the “first disposition”), and
(B) before the person making the first disposition receives all payments with respect to such disposition, the related person disposes of the property (hereinafter in this subsection referred to as the “second disposition”),
then, for purposes of this section, the amount realized with respect to such second disposition shall be treated as received at the time of the second disposition by the person making the first disposition.
(2) 2-Year cutoff for property other than marketable securities
(A) In general
Except in the case of marketable securities, paragraph (1) shall apply only if the date of the second disposition is not more than 2 years after the date of the first disposition.
(B) Substantial diminishing of risk of ownershipThe running of the 2-year period set forth in subparagraph (A) shall be suspended with respect to any property for any period during which the related person’s risk of loss with respect to the property is substantially diminished by—
(i) the holding of a put with respect to such property (or similar property),
(ii) the holding by another person of a right to acquire the property, or
(iii) a short sale or any other transaction.
(3) Limitation on amount treated as receivedThe amount treated for any taxable year as received by the person making the first disposition by reason of paragraph (1) shall not exceed the excess of—
(A) the lesser of—
(i) the total amount realized with respect to any second disposition of the property occurring before the close of the taxable year, or
(ii) the total contract price for the first disposition, over
(B) the sum of—
(i) the aggregate amount of payments received with respect to the first disposition before the close of such year, plus
(ii) the aggregate amount treated as received with respect to the first disposition for prior taxable years by reason of this subsection.
(4) Fair market value where disposition is not sale or exchange
For purposes of this subsection, if the second disposition is not a sale or exchange, an amount equal to the fair market value of the property disposed of shall be substituted for the amount realized.
(5) Later payments treated as receipt of tax paid amounts
If paragraph (1) applies for any taxable year, payments received in subsequent taxable years by the person making the first disposition shall not be treated as the receipt of payments with respect to the first disposition to the extent that the aggregate of such payments does not exceed the amount treated as received by reason of paragraph (1).
(6) Exception for certain dispositionsFor purposes of this subsection—
(A) Reacquisitions of stock by issuing corporation not treated as first dispositions
Any sale or exchange of stock to the issuing corporation shall not be treated as a first disposition.
(B) Involuntary conversions not treated as second dispositions
A compulsory or involuntary conversion (within the meaning of section 1033) and any transfer thereafter shall not be treated as a second disposition if the first disposition occurred before the threat or imminence of the conversion.
(C) Dispositions after deathAny transfer after the earlier of—
(i) the death of the person making the first disposition, or
(ii) the death of the person acquiring the property in the first disposition,
and any transfer thereafter shall not be treated as a second disposition.
(7) Exception where tax avoidance not a principal purpose
This subsection shall not apply to a second disposition (and any transfer thereafter) if it is established to the satisfaction of the Secretary that neither the first disposition nor the second disposition had as one of its principal purposes the avoidance of Federal income tax.
(8) Extension of statute of limitations
The period for assessing a deficiency with respect to a first disposition (to the extent such deficiency is attributable to the application of this subsection) shall not expire before the day which is 2 years after the date on which the person making the first disposition furnishes (in such manner as the Secretary may by regulations prescribe) a notice that there was a second disposition of the property to which this subsection may have applied. Such deficiency may be assessed notwithstanding the provisions of any law or rule of law which would otherwise prevent such assessment.
(f) Definitions and special rulesFor purposes of this section—
(1) Related personExcept for purposes of subsections (g) and (h), the term “related person” means—
(A) a person whose stock would be attributed under section 318(a) (other than paragraph (4) thereof) to the person first disposing of the property, or
(B) a person who bears a relationship described in section 267(b) to the person first disposing of the property.
(2) Marketable securities
The term “marketable securities” means any security for which, as of the date of the disposition, there was a market on an established securities market or otherwise.
(3) Payment
Except as provided in paragraph (4), the term “payment” does not include the receipt of evidences of indebtedness of the person acquiring the property (whether or not payment of such indebtedness is guaranteed by another person).
(4) Purchaser evidences of indebtedness payable on demand or readily tradableReceipt of a bond or other evidence of indebtedness which—
(A) is payable on demand, or
(B) is readily tradable,
shall be treated as receipt of payment.
(5) Readily tradable definedFor purposes of paragraph (4), the term “readily tradable” means a bond or other evidence of indebtedness which is issued—
(A) with interest coupons attached or in registered form (other than one in registered form which the taxpayer establishes will not be readily tradable in an established securities market), or
(B) in any other form designed to render such bond or other evidence of indebtedness readily tradable in an established securities market.
(6) Like-kind exchangesIn the case of any exchange described in section 1031(b)—
(A) the total contract price shall be reduced to take into account the amount of any property permitted to be received in such exchange without recognition of gain,
(B) the gross profit from such exchange shall be reduced to take into account any amount not recognized by reason of section 1031(b), and
(C) the term “payment”, when used in any provision of this section other than subsection (b)(1), shall not include any property permitted to be received in such exchange without recognition of gain.
Similar rules shall apply in the case of an exchange which is described in section 356(a) and is not treated as a dividend.
(7) Depreciable property
The term “depreciable property” means property of a character which (in the hands of the transferee) is subject to the allowance for depreciation provided in section 167.
(8) Payments to be received definedThe term “payments to be received” includes—
(A) the aggregate amount of all payments which are not contingent as to amount, and
(B) the fair market value of any payments which are contingent as to amount.
(g) Sale of depreciable property to controlled entity
(1) In generalIn the case of an installment sale of depreciable property between related persons—
(A) subsection (a) shall not apply,
(B) for purposes of this title—
(i) except as provided in clause (ii), all payments to be received shall be treated as received in the year of the disposition, and
(ii) in the case of any payments which are contingent as to the amount but with respect to which the fair market value may not be reasonably ascertained, the basis shall be recovered ratably, and
(C) the purchaser may not increase the basis of any property acquired in such sale by any amount before the time such amount is includible in the gross income of the seller.
(2) Exception where tax avoidance not a principal purpose
Paragraph (1) shall not apply if it is established to the satisfaction of the Secretary that the disposition did not have as one of its principal purposes the avoidance of Federal income tax.
(3) Related persons
For purposes of this subsection, the term “related persons” has the meaning given to such term by section 1239(b), except that such term shall include 2 or more partnerships having a relationship to each other described in section 707(b)(1)(B).
(h) Use of installment method by shareholders in certain liquidations
(1) Receipt of obligations not treated as receipt of payment
(A) In general
If, in a liquidation to which section 331 applies, the shareholder receives (in exchange for the shareholder’s stock) an installment obligation acquired in respect of a sale or exchange by the corporation during the 12-month period beginning on the date a plan of complete liquidation is adopted and the liquidation is completed during such 12-month period, then, for purposes of this section, the receipt of payments under such obligation (but not the receipt of such obligation) by the shareholder shall be treated as the receipt of payment for the stock.
(B) Obligations attributable to sale of inventory must result from bulk saleSubparagraph (A) shall not apply to an installment obligation acquired in respect of a sale or exchange of—
(i) stock in trade of the corporation,
(ii) other property of a kind which would properly be included in the inventory of the corporation if on hand at the close of the taxable year, and
(iii) property held by the corporation primarily for sale to customers in the ordinary course of its trade or business,
unless such sale or exchange is to 1 person in 1 transaction and involves substantially all of such property attributable to a trade or business of the corporation.
(C) Special rule where obligor and shareholder are related personsIf the obligor of any installment obligation and the shareholder are married to each other or are related persons (within the meaning of section 1239(b)), to the extent such installment obligation is attributable to the disposition by the corporation of depreciable property—
(i) subparagraph (A) shall not apply to such obligation, and
(ii) for purposes of this title, all payments to be received by the shareholder shall be deemed received in the year the shareholder receives the obligation.
(D) Coordination with subsection (e)(1)(A)
For purposes of subsection (e)(1)(A), disposition of property by the corporation shall be treated also as disposition of such property by the shareholder.
(E) Sales by liquidating subsidiaries
For purposes of subparagraph (A), in the case of a controlling corporate shareholder (within the meaning of section 368(c)) of a selling corporation, an obligation acquired in respect of a sale or exchange by the selling corporation shall be treated as so acquired by such controlling corporate shareholder. The preceding sentence shall be applied successively to each controlling corporate shareholder above such controlling corporate shareholder.
(2) Distributions received in more than 1 taxable year of shareholderIf—
(A) paragraph (1) applies with respect to any installment obligation received by a shareholder from a corporation, and
(B) by reason of the liquidation such shareholder receives property in more than 1 taxable year,
then, on completion of the liquidation, basis previously allocated to property so received shall be reallocated for all such taxable years so that the shareholder’s basis in the stock of the corporation is properly allocated among all property received by such shareholder in such liquidation.
(i) Recognition of recapture income in year of disposition
(1) In generalIn the case of any installment sale of property to which subsection (a) applies—
(A) notwithstanding subsection (a), any recapture income shall be recognized in the year of the disposition, and
(B) any gain in excess of the recapture income shall be taken into account under the installment method.
(2) Recapture income
For purposes of paragraph (1), the term “recapture income” means, with respect to any installment sale, the aggregate amount which would be treated as ordinary income under (or so much of section 751 as relates to section 1245 or 1250) for the taxable year of the disposition if all payments to be received were received in the taxable year of disposition.
(j) Regulations
(1) In general
The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the provisions of this section.
(2) Selling price not readily ascertainable
The regulations prescribed under paragraph (1) shall include regulations providing for ratable basis recovery in transactions where the gross profit or the total contract price (or both) cannot be readily ascertained.
(k) Current inclusion in case of revolving credit plans, etc.In the case of—
(1) any disposition of personal property under a revolving credit plan, or
(2) any installment obligation arising out of a sale of—
(A) stock or securities which are traded on an established securities market, or
(B) to the extent provided in regulations, property (other than stock or securities) of a kind regularly traded on an established market,
subsection (a) shall not apply, and, for purposes of this title, all payments to be received shall be treated as received in the year of disposition. The Secretary may provide for the application of this subsection in whole or in part for transactions in which the rules of this subsection otherwise would be avoided through the use of related parties, pass-thru entities, or intermediaries.
(l) Dealer dispositionsFor purposes of subsection (b)(2)(A)—
(1) In generalThe term “dealer disposition” means any of the following dispositions:
(A) Personal property
Any disposition of personal property by a person who regularly sells or otherwise disposes of personal property of the same type on the installment plan.
(B) Real property
Any disposition of real property which is held by the taxpayer for sale to customers in the ordinary course of the taxpayer’s trade or business.
(2) ExceptionsThe term “dealer disposition” does not include—
(A) Farm property
The disposition on the installment plan of any property used or produced in the trade or business of farming (within the meaning of section 2032A(e)(4) or (5)).
(B) Timeshares and residential lots
(i) In general
Any dispositions described in clause (ii) on the installment plan if the taxpayer elects to have paragraph (3) apply to any installment obligations which arise from such dispositions. An election under this paragraph shall not apply with respect to an installment obligation which is guaranteed by any person other than an individual.
(ii) Dispositions to which subparagraph appliesA disposition is described in this clause if it is a disposition in the ordinary course of the taxpayer’s trade or business to an individual of—
(I) a timeshare right to use or a timeshare ownership interest in residential real property for not more than 6 weeks per year, or a right to use specified campgrounds for recreational purposes, or
(II) any residential lot, but only if the taxpayer (or any related person) is not to make any improvements with respect to such lot.
For purposes of subclause (I), a timeshare right to use (or timeshare ownership interest in) property held by the spouse, children, grandchildren, or parents of an individual shall be treated as held by such individual.
(C) Carrying charges or interest
Any carrying charges or interest with respect to a disposition described in subparagraph (A) or (B) which are added on the books of account of the seller to the established cash selling price of the property shall be included in the total contract price of the property and, if such charges or interest are not so included, any payments received shall be treated as applying first against such carrying charges or interest.
(3) Payment of interest on timeshares and residential lots
(A) In general
In the case of any installment obligation to which paragraph (2)(B) applies, the tax imposed by this chapter for any taxable year for which payment is received on such obligation shall be increased by the amount of interest determined in the manner provided under subparagraph (B).
(B) Computation of interest
(i) In generalThe amount of interest referred to in subparagraph (A) for any taxable year shall be determined—
(I) on the amount of the tax for such taxable year which is attributable to the payments received during such taxable year on installment obligations to which this subsection applies,
(II) for the period beginning on the date of sale, and ending on the date such payment is received, and
(III) by using the applicable Federal rate under section 1274 (without regard to subsection (d)(2) thereof) in effect at the time of the sale compounded semiannually.
(ii) Interest not taken into account
For purposes of clause (i), the portion of any tax attributable to the receipt of any payment shall be determined without regard to any interest imposed under subparagraph (A).
(iii) Taxable year of sale
No interest shall be determined for any payment received in the taxable year of the disposition from which the installment obligation arises.
(C) Treatment as interest
Any amount payable under this paragraph shall be taken into account in computing the amount of any deduction allowable to the taxpayer for interest paid or accrued during such taxable year.
(Added Pub. L. 96–471, § 2(a), Oct. 19, 1980, 94 Stat. 2247; amended Pub. L. 97–34, title II, § 202(c), Aug. 13, 1981, 95 Stat. 221; Pub. L. 97–448, title III, § 303, Jan. 12, 1983, 96 Stat. 2398; Pub. L. 98–369, div. A, title I, § 112(a), title IV, § 421(b)(6)(B), (C), July 18, 1984, 98 Stat. 635, 794; Pub. L. 99–514, title VI, §§ 631(e)(8), 642(a)(1)(D), (3), (b), title VIII, § 812(a), title XVIII, § 1809(c), Oct. 22, 1986, 100 Stat. 2274, 2284, 2371, 2821; Pub. L. 100–203, title X, § 10202(b), Dec. 22, 1987, 101 Stat. 1330–388; Pub. L. 100–647, title I, §§ 1006(e)(7), (i)(1), (2), 1008(g)(1), 1018(u)(25), (26), title II, § 2004(d)(1), (5), Nov. 10, 1988, 102 Stat. 3401, 3410, 3442, 3591, 3599; Pub. L. 106–170, title V, § 536(a), Dec. 17, 1999, 113 Stat. 1936; Pub. L. 106–573, § 2(a), Dec. 28, 2000, 114 Stat. 3061; Pub. L. 108–357, title VIII, § 897(a), Oct. 22, 2004, 118 Stat. 1649.)