Does the sale of real property in foreclosure constitute a voluntary sale for purposes of income tax purposes?
California, United States of America
The following excerpt is from Walnut Manor Assoc.s v. Keys, C057198, No.CV991464 (Cal. App. 2010):
The sale of real property in foreclosure is treated the same as a voluntary sale for purposes of income taxation. (Helvering v. Hammel (1941) 311 U.S. 504 [85 L.Ed. 303].) Hence, to the extent the property is sold for more than the debtor's adjusted basis in the property, the debtor realizes a capital gain, even if the debtor received nothing out of the sale.
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