Terry owns real estate with an adjusted basis of 600000 and

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Terry owns real estate with an adjusted basis of 600,000 and a light market value of 1.1 million. The amount of the nonrecourse mortgage on property is 2.5 million. Because of substantial past and projected future losses connected with the real estate development (occupancy rates of only 37 percent after three years), Terry deeds the property to the creditor

A. Evaluate what are the tax consequences to Terry?

B. Suppose that the data are the same, except that the fair market value of property is 2,525,000. Thus, when terry deeds the property to creditor, she also receives 25,000 from the creditor. What are the tax consequences to terry?

Reference no: EM13370922

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