Home Buyer Credit and Bankruptcy

[Randall]

Client received the $7500 credit in 2008. Paid $500 back in 2010. Filed bankruptcy in 2011, bank took back home. Am I correct in using balance of unpaid loan as 'selling price' and calculating gain or loss on 5405? Or is there a special exception for bankruptcy that would eliminate pay back of credit? I'm still waiting on some info from client and I'm thinking there will be a loss eliminating the pay back anyway. But I wanted to throw the topic out for response.

[ILLMAS]

Check this out:

http://www.irs.gov/newsroom/article/0,,id=206292,00.html

MAS

[Randall]

Thanks. That's what I was seeing too. I'm waiting for more info on the purchase amounts (wasn't my client in 2008, year of purchase). I think basis will be $7000 (amount of unpaid credit) over 'selling price'.