sethb[at]panix.com (Seth) wrote:
- quote -

In effect he paid a fine in the amount of the value of the
house.

- quote -

It's the same thing.

Stu

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Stuart Bronstein <spamtrap[at]lexregia.com> wrote:

- quote -

Why? He "sold" the house for $0.

If the government said "You owe a fine of $125,000 so we're
taking your share of the house for that much" I could see
that as equivalent to a sale at that price. But when it
says "We're taking your share of the house" there's no such
"sale".

Seth

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William Brenner <wbrenner[at]nospamplease.net> wrote:

- quote -

Since the government isn't a tax paying entity, I don't
think it makes a whole lot of difference. That said, it's
probably market value on the date of forfeiture.

- quote -

Only to the extent they would be subject to tax on the value
of anything forfeited. If they were subject to tax, they'd
probably have to claim ordinary income in the value of what
they forfeited on the date of forfeiture. If it were later
sold, they would have a taxable, possibly capital gain in
the amount of any increase in value after that date.

- quote -

She'd get the whole exemption, but on only her half of the
house.

One issue is whether, upon forfeiture, the husband has any
taxable capital gain. I suspect he might.

- quote -

I think the federal government is exempt, though I'm not
sure. Assuming they are, the wife is likely only liable for
half the property tax.

- quote -

Depends on what they do. If it could be considered a public
or private nuisance, they could be sued to have it abated.

But whenever there are two owners of property, one has the
right to have the place sold and the proceeds split. So I
don't think it's a real issue.

- quote -

There's an answer for every question. They may not be
right, but they are certainly there.

Stu

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Here is a strange one which raises some not very important
tax questions:

What is the government's cost basis for its half of the
house?

Would the government be subject to capital gains tax should
the house be sold at a profit? To whom would it be paid?

If the profit was large enough, would the woman get the
benefit of her full $250,000 exemption or just half of it?

How about local property taxes? Is the government exempt?
And if so, would the woman have to pay 100%?

Not a tax question, but, zoning permitting, what's to
prevent the government from using its half as a half-way
house or other such use that would not be very pleasant for
the other half owner?

I am not really seeking answers to these questions. They are
merely thoughts that passed through my slightly addled
brain.

Here is the story:

http://www.breitbart.com/article.php...show_article=1

[NOTE TO THE HONOURABLE MODERATOR: Despite the standard AP
disclaimer, this article was published by both Breitbart and
Drudge.]

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