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MORE ON MORTGAGE DEBT CANCELLATION TAX ISSUES
Effects of the sub-prime mortgage debacle are no doubt being felt by all. Especially desperate are those who purchased dream castles during 2005, 2006 and 2007 and are now among the largest group upside down to their mortgage debt and facing foreclosure or abandonment. This issue updates and expands on my previous discussion of mortgage forgiveness of a personal residence appearing in the May 8, 2008 issue. The relief granted by Congress to distressed homeowners who are released from part or all of mortgage debt obligations presents complex and tricky tax law issues that are best handled with the assistance of a lawyer experienced in tax matters.
The Mortgage Forgiveness Debt Relief Act of 2007 (Act) provides tax relief to defaulting homeowners who might otherwise owe income tax on qualifying mortgage obligations forgiven in 2007 through 2009. The Emergency Economic Stabilization act of 2008 extended that relief through 2012.
A lender that is paid less than the full principal owed on a mortgage often decides not to personally pursue the borrower for the deficiency i.e., the amount by which the amount of the mortgage debt obligation exceeds the value of the foreclosed property. In that case the lender is required to file Form 1099-C informing IRS and the borrower of the cancelled portion of the debt. The amount of cancelled debt is taxed at the higher ordinary income tax rates (not as a capital gain) unless certain narrow exceptions or escape hatches are available.
WHY CANCELLATION OF DEBT IS TAXED
Many logically ask: “Why am I taxed on a debt I cannot afford to pay when I’ve received no funds and have lost my home?” The answer is not comforting: the income tax applies to all income from whatever source derived. Income means an economic benefit received or constructively received, whether in cash or property or in some other form not constituting a gift. When you receive loan proceeds there is no immediate economic benefit because you have an equa...
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The stock market has been a see-saw ridden on one end by the desire for returns and on the other by fear. Glimmers of recovery squeezed from dubious statistical measures ramp up investor appetite for risk and buoy stock prices until hopes are dashed by another dour economic report or event re-igniting fear and dousing market enthusiasm. While the market has recovered from its nadir, slow rebounding corporate profits will drag stock performance down as companies adjust business models to a new environment of tighter credit, stingy consumer spending and closer regulatory scrutiny.
Investors in today’s market would do well to keep mindful the lyric from the song “Cool” by Stephen Sondheim (music by Leonard Bernstein) in the legendary Broadway show ‘West Side Story: “Boy, boy crazy boy / Get cool boy / Got a rocket in your pocket/ Keep coolie cool boy.” Patience, calm and caution are the watchwords of the day.
The economy is at a crossroads and may take a number of directions according to a recent Wall Street Journal commentary:
1. Another Great Depression. Thanks to the Obama stimulus plan this scenario is considered most unlikely at this stage of the U.S. recession although entirely possible in Europe where the central bank has been more tentative in employing direct fiscal intervention.
2. A Quick Rebound recovery. This is akin to the rebound effect of a Bongi jump when at the lowest point of the fall tension causes an opposite upward reaction. The tension in economic metrics is found in tax incentives, direct government spending and lean inventories that eventually are restocked as pent up consumer demand restarts production. With so much wealth having evaporated and consumer habits perhaps changed for some time to come, however, a quick rebound also seems unlikely.
3. A Lost Decade. The International Monetary Fund observed recently that recoveries from global recessions due to financial crises are typically slower. The U.S. economy could...
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The material is prepared by order of NTV
Upon marriage registration the spouses by all means may take measures for saving their property harmless in the event of divorce. In case of non-availability of a contract between the spouses, the property acquired in wedlock will be divided in equal parts. The spouses may choose the contractual basis for the spouses’ property, thus saving themselves harmless from possible proper disputes in the future and saving time and money required for litigation.
However no contract can be a guarantee, far less in the family life. No insurance company will ever sell insurances against ill-starred marriage and dishonest conduct of the spouses in the marriage.
The marriage contract in Russia regulates only property relations of the spouses. The contract provisions regulating anything other than property relations are void. Upon registration of marriage with a foreigner one should take into account the specificities of his country and proceeds from the country in which the spouses intend to reside.
When marrying a foreigner the spouses should realize that the social environment in which they have grown is very different. Different parents, upbringing, education; different languages, different religion, culture, traditions. On top of that, the Internet through which people rather often get acquainted does not encourage deep understanding of each other. We live in the century of high technologies and space velocities. Therefore everything happens very quickly: sympathy, love, marriage... The instant of recognition is relegated to be of distant, non-essential importance. As a consequence, the majority of intermarriages result in divorce during the first year of marriage.
Why do wars between the spouses begin and why do they use nasty methods? – I believe the answer is obvious – money. Many people think that money rules the world, and many of them are unaware of such notions as decency, mutual responsibility, nobility. It is the money that forms the basis for t...
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TO WHOM OT MAY CONCERN
Citizen of the Russian Federation Ms. XXXXXXXXX, born on XXXXXXXXX in XXXXXXXXXXXXXXXX, Russian Federation, has been permanently residing in XXXXXXXXXXXXX since XXXXXXXXXXXXX at the address: XXXXXXXXXXXXXXXXXXXXXXXXXXXX.
Ms. XXXXXXXXXXXXXX XXXXXXXXXXX XXXXXXXXXXXXXXXX is not married, has close relatives in the Russian Federation and Kazakhstan. Her mother XXXXXXXX XXXXXXXXXX XXXXXXXXXXXX, born on XXXXXXXXXXXXXX, is permanently residing in Kazakhstan, XXXXXXXXXX, XXXXXXXXXXXXXXXXXXXX. For health reasons mother of XXXXXXXXX XXXXXXXXX XXXXXXXXXXXX is under permanent care of specialists because of surgical operation she has undergone.
Pursuant to the effective law, the Russian citizens do not need visa for going to Kazakhstan. XXXXXXXX, being a citizen of the Russian Federation, may visit her sick mother without hindrance and limitations in Kazakhstan, to help and support her.
At the same time getting a visa to Kazakhstan presents severe difficulties and bureaucratic obstacles for foreign citizens. In case of termination of XXXXXXXX’s Russian citizenship she will lose the possibility to visit her mother without hindrance.
The availability of Russian citizenship enables the citizens of the Russian Federation to visit any place of former USSR without hindrances, except for several countries, for which visa is required. Loss of citizenship will result in the impossibility to visit relatives in the countries of former USSR, even when having a Russian visa.
Foreign citizens have numerous restrictions on the territory of the Russian Federation (in particular the citizens, which have ceased being Russian citizens voluntarily), the requirements for getting a visa to Russia are very severe, the stay of a foreign citizen in Russia is strictly regulated by laws and bylaws of the Russian Federation.
In order to receive a visa to Russia, a person should have an invitation, while no invitation is require...
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DISCLAIMER: THE INFORMATION IN THIS CIRCULAR IS PROVIDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE TOTALLY ACCURATE IN A PARTICULAR
CASE. QUESTIONS INVOLVING INTERPRETATION OF SPECIFIC U.S. STATE OR FOREIGN LAWS SHOULD BE ADDRESSED TO LEGAL COUNSEL IN THAT
STATE v. FEDERAL JURISDICTION: Marriage and divorce generally are considered matters reserved to the states rather than to the federal government. See,
Sosna v. Iowa, 419 U.S. 393, 404 (1975) and Armstrong v. Armstrong, 508 F. 2d 348 (1st Cir. 1974 ). There is no treaty in force between the United States and any country on enforcement of judgments, including recognition of foreign divorces.
RECOGNITION BASED ON COMITY: A divorce decree issued in a foreign country generally is recognized in a state in the United States on the basis of comity
(Hilton v. Guyot, 159 U.S. 113, 163-64 (1895), provided both parties to the divorce received adequate notice, i.e., service of process and, generally, provided one of the
parties was a domiciliary in the foreign nation at the time of the divorce. Under the principle of comity, a divorce obtained
in another country under the circumstances described above receives "full faith and credit" in all other states and countries
that recognize divorce. Although full faith and credit may be given to an ex parte divorce decree, states usually consider
the jurisdictional basis upon which the foreign decree is founded and may withhold full faith and credit if not satisfied
regarding domicile in the foreign country. Many state courts which have addressed the question of a foreign divorce where
both parties participate in the divorce proceedings but neither obtains domicile there have followed the view that such a
divorce invalid (Weber v. Weber, 200 Neb. 659, 265 N.W.2d 436 (1978); Everett v. Everett, 345 So. 2d 586 (La. Ct. App...
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