Debt Cancellation & Foreclosure Gain Worksheet

Part 1: Complete Part 1 only if you were personally liable for the debt (even if none was cancelled). If debt is nonrecourse skip to Part 2.

1. Amount of outstanding debt before transfer of property reduced by any amount for which you remain personally liable immediately after the transfer

2. Fair Market Value of transferred property

3. Ordinary income from the cancellation of debt upon foreclosure or repossession*
(Subtracts line 2 from line 1. If less than zero, this automatically becomes zero)

Part 2: Gain or Loss from Foreclosure or Repossession

4. Takes the smaller of line 1 or line 2. If you did not complete Part 1 because of nonrecourse debt, enter the amount of outstanding debt before transfer

5. Enter any proceeds you received from the sale

6. Adds line 4 and line 5

7. Enter the adjusted basis of transferred property

8. Gain or loss from foreclosure or repossession**
(Subtracts line 7 from line 6)

* The income may not be taxable. See Exception, Exclusions & Relief

** Any loss is deductible only to the extent related to trade, business or investment use. Loss on sale of principal residence or nonbusiness personal property is not deductible.

The foregoing worksheet is for general guidance purposes only. Tax laws and regulations in this area can be complex. You are encouraged to seek the advice of your tax advisor.