Congress fixes a brutal tax law and Bush signs it

[lawrocket 3]

How many people out there have heard of Cancellation of Debt Income? In CODI, if a debt is waived, the IRS considers it taxable income.

This has been a particularly tough issue in the last few months. This is seen in foreclosures and short sales. Let's say that a homeowner cannot afford the mortgage and sells the home for $250,000.00, but there is still $300,000.00 owing on the mortgage. If the bank agrees, this is called a "short sale." The bank will not seek liability for that remaining $50,000.00 because the bank has canceled the debt.

Under the IRS rules, this canceled debt is considered income. The IRS reckons that that homeowner just made $50,000.00. And the IRS wants it's tax money from it. The same holds true for foreclosure.

Today, Bush signed a bill that ends this practice with mortgages. It provides a tax break to homeowners who have mortgage debt forgiven as part of a foreclosure or renegotiation of a loan. No taxes would be owed on the value of any debt forgiven or written off.

I have spoken to many homeowners who were heartbroken at the concept of facing a tax bill from a foreclosure or short sale.

Now these people are getting a break they deserve.

I applaud Congress and the President for passing a law that just makes sense.

My wife is hotter than your wife.

[Royd 0]

Sounds like he's filling the compassionate side of his slogan.

[nathaniel 0]

Let me get this straight: CEOs can now avoid income tax if they take mortgages from their companies and the company renegotiates the terms down to a pittance?

It seems too obvious...what abuse protections are built in?

My advice is to do what your parents did; get a job, sir. The bums will always lose. Do you hear me, Lebowski?

[Lucky... 0]

As Nathaniel wrote, it seems there must be a corporate hook. Altho dirtbag in chief could have written in protection for corps, none for individuals. I am objective and can applaud the loser for that as well as lawsuit immunity for gun makers - the only positive things he's done in 7 years.

Nw if we can get him to stop excluding millions from healthcare access and stop immunizing telecom corps for helping his admin illegally tap phones.....

[Lucky... 0]

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Sounds like he's filling the compassionate side of his slogan.

Yea, good one.....

[jpjc2000 0]

Any law that stops the IRS from stealing money is a good law!!!

[rushmc 18]

Wow, after reading some of the replys on this thread I see the " you got more money than me so the Government or IRS should get (it from) you" class envy mentality on this site.

It would be tough. for me anyway. to go through life being pissed somebody has more than me It would be hard to ever be happy.

I am glad he signed it too. I dont care if a CEO gets some debt forgiven

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[Glitch 0]

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...I dont care if a CEO gets some debt forgiven

Why not? Their golden parachutes are typically at the expense of the workers...

Randomly f'n thingies up since before I was born...

[warpedskydiver 0]

You were against immunity from lawsuits for legally operated businesses, producing a product which may be misused by the customers, or those who steal, or illegally own a product?

You are wayyyyyy the fuck out there aren't you?

[rushmc 18]

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...I dont care if a CEO gets some debt forgiven

Why not? Their golden parachutes are typically at the expense of the workers...

Let me turn it around. What difference does it make to you? Assuming that not all people should get this kind of relief, would you repeal the law just to make sure the CEO "got his" when it would mean somebody really needing this kind of relief does not?

What pain is caused you if that CEO did not get the "punishment" you feel he deserves???

Of course I am acepting the premise of this from your perspective. In reallity, I really do not.

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[jm951 0]

Workers of the world Unite!!

Down with the bourgeois!!! Long live the Proletariat!!!

Tax the rich, feed the poor, till there are no rich no more. I'd love to change the world....
Ten Years After

[Misternatural 0]

>>I applaud Congress and the President for passing a law that just makes sense.

Yeah, I know how you feel, What's going on here? For 7 years I derided the administration about their gridlock and staunch- thumb in the eye approach toward public opinion- and now bills just seem to be flying through Washington. Government seems to be working.

Beware of the collateralizing and monetization of your desires.
D S #3.1415

[Gawain 0]

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...I dont care if a CEO gets some debt forgiven

Why not? Their golden parachutes are typically at the expense of the workers...

Really? When did workers start paying in order to work for the companies that employ them?

As to the relief that the President signed, unless I'm mistaken, the window for this is only three years. Too long in my opinion and I don't think a law was necessary to lay out this framework.

Banks do not want the properties they hold title for in these mortgages. While the "evil scheme" seems to fit that mold, with the real estate deflating a bit, they do not want to take further losses on assets they just took a loss in forgiving debt. Any business should be able to see the longer term benefit of keep and restructure the loans. The customer keeps a roof over their head, the bank keeps the paper, and hopefully both learned from the behavior change their habits for the long term. If not, they both will get it.

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!

[nathaniel 0]

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class envy mentality

Who said anything about class envy?

I just want to know if I should restructure my retirement plans

My advice is to do what your parents did; get a job, sir. The bums will always lose. Do you hear me, Lebowski?

[nerdgirl 0]

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It sounds too good to be true. Create a trust or a corporation, take a loan, forgive the loan...

I think this has already been tried in some variation in the corporate world ... & if I recall correctly, this was one of the charges that one of recent CEO convictions was about (partially). Not the Enron guys. I think it was the guy from Tyco toys ... or maybe one of the WorldCom guys. Sorry, I'm not more specific.

VR/Marg

Act as if everything you do matters, while laughing at yourself for thinking anything you do matters.
Tibetan Buddhist saying

[lawrocket 3]

Let me explain how it worked:

Let's say that a homeowner is having trouble making ends meet. The homeowner puts the home up for sale and sells the home for $250,000.00. But there is still $300,000.00 owing on the mortgage. If the bank agrees to take less, this is called a "short sale." The bank will not seek liability for that remaining $50,000.00 because the bank has canceled the debt, and the homeowner is free from that $50k he would owe.

Then the homeowner got smacked. Under the IRS rules, this canceled debt is considered income. The IRS reckons that that homeowner just made $50,000.00. And the IRS wants it's tax money from it. Imagine the surprise when the 1099 comes for $50k. And the IRS wants its money.

The same holds true for foreclosure. If the foreclosed house sold for $250k on a $300k note, and the bank did not go for a deficiency judgment but canceled the debt, then the same rule would apply.

So, imagine the poor family that just lost a house, has nothing, and gets hit with a tax bill for $7,500.00, or more because the income level just went up and the family is now at a higher tax bracket.

This law changes that liability so that the foreclosed family isn't given a final kick in the face by Uncle Sam. It is not considered income anymore so long as the property was used as a residence.

This change is expected to cost Uncle Sam $650 million - $650 million that would have come from people without the ability to pay it.

I VERY much applaud this change.

My wife is hotter than your wife.

[lawrocket 3]

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now bills just seem to be flying through Washington.

This bill was introduced in the House on April 17, 2007 and in the Senate on May 15, 2007. The Act is beautiful for its simplicity, and I believe there were no Amendments. A problem that is easy to identify and a simple solution.

The government did its job with apt speed and appropriate deliberation. Everyone could agree on this.

What is truly shocking is that there are perhaps MILLIONS of people who will be helped by this (parents and children) and there are STILL people out there who are alleging corporate kickbacks and greed and abuse instead of looking at the large people it will help who TRULY need the help. Thus, because of an allegation (without reading the bill) that a company would cancel a debt for an officer (in breach of any fiduciary duties, etc), thsi bill should be derided.

It really does appear that there is a large number of people who are truly not interested in helping the poor so much as they are interested in tearing down those who are not, thus to create a society of equal misery for all.

Of course, valid reasons exist to question the bill, since it once again can seem to penalize those who do things the right way. But I don't find that to be the case.

My wife is hotter than your wife.

[rushmc 18]

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now bills just seem to be flying through Washington.

This bill was introduced in the House on April 17, 2007 and in the Senate on May 15, 2007. The Act is beautiful for its simplicity, and I believe there were no Amendments. A problem that is easy to identify and a simple solution.

The government did its job with apt speed and appropriate deliberation. Everyone could agree on this.

What is truly shocking is that there are perhaps MILLIONS of people who will be helped by this (parents and children) and there are STILL people out there who are alleging corporate kickbacks and greed.

IT really does appear that there are a large number of people who are truly not interested in helping the poor so much as they are interested in tearing down those who are not, thus to create a society of equal misery for all.

What is also sad? Say a Bill Clinton was the president that signed this bill. Then, it would have been done for the right reasons and shown great compassion. This is what politics have fallen to in this country

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[rehmwa 2]

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What is also sad? Say a Bill Clinton was the president that signed this bill. Then, it would have been done for the right reasons and shown great compassion. This is what politics have fallen to in this country

they can fly Billybob in and he can initial it, too

that should fix the issues

...
Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

[lawrocket 3]

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Say a Bill Clinton was the president that signed this bill. Then, it would have been done for the right reasons and shown great compassion. This is what politics have fallen to in this country

Yep. But the naysayers would have come from the other side. The Clinton haters would have roasted him for it, simply because he signed it.

It's been that way for the last couple of hundred years, I'm afraid.

My wife is hotter than your wife.

[rushmc 18]

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What is also sad? Say a Bill Clinton was the president that signed this bill. Then, it would have been done for the right reasons and shown great compassion. This is what politics have fallen to in this country

they can fly Billybob in and he can initial it, too

that should fix the issues

not the point (and I believe you know it)

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[rehmwa 2]

Quote

Quote

Say a Bill Clinton was the president that signed this bill. Then, it would have been done for the right reasons and shown great compassion. This is what politics have fallen to in this country

Yep. But the naysayers would have come from the other side. The Clinton haters would have roasted him for it, simply because he signed it.
.

so, then, if both of them sign it, then would:

everybody like it?
or everybody hate it?

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It's been that way for the last couple of hundred years, I'm afraid

wow, I had no idea Clinton was that old

...
Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

[rushmc 18]

Quote

Quote

Say a Bill Clinton was the president that signed this bill. Then, it would have been done for the right reasons and shown great compassion. This is what politics have fallen to in this country

Yep. But the naysayers would have come from the other side. The Clinton haters would have roasted him for it, simply because he signed it.

It's been that way for the last couple of hundred years, I'm afraid.

Maybe but I do not believe so. Had BC signed it (IMO) it would not have been about corp greed but a great dead for the little guy

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[lawrocket 3]

Quote

so, then, if both of them sign it, then would:

everybody like it?
or everybody hate it?

The lefties would say:
Clinton would have done it for all the right reasons, i.e., helping the poor while ensuring that the wealthy pay their fair share.
Bush would have done it for all the wrong reasons, i.e., provide opportunities for corporate abuse, big oil and Halliburton, and to help predatory lenders.

the righties would say:
Bush did it for the right reasons, eliminating an unfair tax and assisting those in need by allowing them to keep their money.
Clinton did it for the wrong reasons, by pandering to the lower class in an attempt to get votes while shifting the taxes to the middle class and the rich in yet another socialist scheme.

My wife is hotter than your wife.

[JohnnyD 0]

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Let me explain how it worked:

Let's say that a homeowner is having trouble making ends meet. The homeowner puts the home up for sale and sells the home for $250,000.00. But there is still $300,000.00 owing on the mortgage. If the bank agrees to take less, this is called a "short sale." The bank will not seek liability for that remaining $50,000.00 because the bank has canceled the debt, and the homeowner is free from that $50k he would owe.

Then the homeowner got smacked. Under the IRS rules, this canceled debt is considered income. The IRS reckons that that homeowner just made $50,000.00. And the IRS wants it's tax money from it. Imagine the surprise when the 1099 comes for $50k. And the IRS wants its money.

The same holds true for foreclosure. If the foreclosed house sold for $250k on a $300k note, and the bank did not go for a deficiency judgment but canceled the debt, then the same rule would apply.

So, imagine the poor family that just lost a house, has nothing, and gets hit with a tax bill for $7,500.00, or more because the income level just went up and the family is now at a higher tax bracket.

This law changes that liability so that the foreclosed family isn't given a final kick in the face by Uncle Sam. It is not considered income anymore so long as the property was used as a residence.

This change is expected to cost Uncle Sam $650 million - $650 million that would have come from people without the ability to pay it.

I VERY much applaud this change.

Read here: http://www.irs.gov/newsroom/article/0,,id=174034,00.html
I get where you are coming from, but it is an oversimplified opinion. There are certain things that will trigger income on forgiveness of debt related to foreclosure. Pretty much the same things that relate to the bailout on variable rate mortgages - which you disagreed with.
Think of those advertisements - "act now and we'll refinance up to 110% of your home's value".
Not a great idea if you live in a place where real estate doesn't appreciate rapidly enough to get you out from under the inevitable.

>This law changes that liability so that the foreclosed family isn't given a final kick in the face by Uncle Sam.

The way the law was written, you generally got a kick in the face because you deserved it. Now you can "sell your house in advance", get your shitty mortgage fixed and get a capital gain exclusion when you sell it - all courtesy of the gov't. "We're here to help". I really wish I was completely financially irresponsible at times.