- 6 - (i) for purposes of determining any loss, be equal to the lesser of the adjusted basis of such asset or the fair market value of such asset as of such date, and (ii) for purposes of determining any gain, be equal to the higher of the adjusted basis of such asset or the fair market value of such asset as of such date. * * * * * * * (5) Adjusted basis.--For purposes of this subsection, the adjusted basis of any asset shall be determined under part II of subchapter O of the Internal Revenue Code of 1954. In computing the gain or loss from its foreclosure sales, petitioner determined its adjusted basis pursuant to DEFRA section 177(d)(2) for mortgages acquired before, and held on, January 1, 1985. In determining its adjusted basis under these transition rules, petitioner included in its regular adjusted cost basis the amounts of unpaid interest which it had accrued from the date of acquisition of each mortgage to the date of foreclosure on the underlying real estate. These amounts of accrued interest included certain interest which had accrued before January 1, 1985. Petitioner used its regular adjusted cost basis in determining the amount of any gain realized, or loss incurred, on the foreclosure of real estate securing mortgages that petitioner owned on January 1, 1985. During the taxable year 1985, petitioner foreclosed on 2,735 mortgages which it had held on January 1, 1985, and petitioner included in its adjusted costPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011