- F, who is solvent, holds Blackacre (unimproved land). F’s basis in Blackacre is $25,000. Blackacre is encumbered by a $45,000 mortgage for which F has a personal liability (i.e., the mortgage debt is a recourse debt). The fair market value of Blackacre is $40,000. F transfers Blackacre to the mortgagee who agrees to cancel the mortgage. The mortgagee, which is a bank, was not the person who had sold Blackacre to F.
- What are the tax consequences to F?
- Same as a., except that F is hopelessly insolvent.
- Same as b., except that the $45,000 mortgage is nonrecourse.
(Do NOTjust answer “yes” or “no.” Do NOT just provide a numerical answer without explaining how you derived it.)