Because of Depreciation, an Amount Received on a Sale of Collateral

question 57

True/False

Because of depreciation, an amount received on a sale of collateral may be less than the amount owed on the debt, but a debtor who has defaulted is not likely to have the funds to pay the deficiency.

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Definitions:

Schedule D

A tax form used to report capital gains and losses incurred during a specific year.

Form 4797

A tax form used to report the sale or exchange of business property.

Trade or Business

An activity engaged in regularly and continuously for the purpose of earning income or profit.

Mortgage

A loan secured by real property, typically used to purchase the property itself, where the borrower agrees to repay the lender over a period of time.