. Debtor purchased a home in 2007 for $100,000. Acme Savings and Loan obtained a first mortgage in the property in exchange for an $80,000 loan. In 2010 Debtor's former business partner Smith obtained a judgment lien against Debtor for $40,000. In 2013 Debtor made home improvement by a $10,000 loan from First Financial in exchange for a second mortgage.   Upon default, foreclosure proceedings forced a sale of Debtor's home in December 2022. At the time debtor owed Acme $70,000, Smith $30,000 and First Financial $8,000. The house was sold for $90,000. Selling expenses were $5,000.   a. How much would each creditor receive from the proceeds of the sale?    b. How much is the deficiency?

Individual Income Taxes
43rd Edition
ISBN:9780357109731
Author:Hoffman
Publisher:Hoffman
Chapter7: Deductions And Losses: Certain Business Expenses And Losses
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1. Debtor purchased a home in 2007 for $100,000. Acme Savings and Loan obtained a first mortgage in the property in exchange for an $80,000 loan. In 2010 Debtor's former business partner Smith obtained a judgment lien against Debtor for $40,000. In 2013 Debtor made home improvement by a $10,000 loan from First Financial in exchange for a second mortgage.

 

Upon default, foreclosure proceedings forced a sale of Debtor's home in December 2022. At the time debtor owed Acme $70,000, Smith $30,000 and First Financial $8,000. The house was sold for $90,000. Selling expenses were $5,000.

 

a. How much would each creditor receive from the proceeds of the sale? 

 

b. How much is the deficiency?

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