[Tom C]

...deed-in-lieu-of-foreclosure transaction? I hold a mortgage on a single family home. The borrower (a real estate rehabber/speculator) operating as an LLC has failed to make the contractual payments due and thus my foreclosure is well under way. The borrower has never occupied the home, he rents it out. The borrower has indicated he might be willing to tender a deed-in-lieu-of-foreclosure". The difference between the amount due and the principal owed is considerable, but the odds are high that I will not recoup the principal owed either at a sheriff's sale or direct sale or to someone else.My question involves whether I am required to render a 1099 for the amount foregiven. My last understanding of such matters was that I would be required to render one for the foregiven amount, and that the borrower would be required to report it. However, I think I heard of a recent change wherein the homeowner in a take-back situation would not be required to report the gift, thus negating the requirement to issue a 1099. The borrower in this case, however, is not the homeowner but rather is in the business of buying/selling/rehabbing houses and is not the occupant. His principal residence has not changed for many years. So, do I 1099 him?