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176. Does an Installment Sale Defer the Tax on Recapture of Accelerated Depreciation? No. Can the Tax on Recapture of Accelerated Depreciation Nevertheless Be Deferred When an Installment Sale Occurs? Yes.
162. Transfer a Family Business to the Next Generation During the Parent's Lifetime, Retain an Asset for Income, Give the Transferee a Stepped-up Basis, Defer the Gain on Sale, Support the Parent with Deductible Rent, and Finance the Transaction, Too
June 3, 2010
Important announcement: With the hurdles now overcome, we are pleased to announce our criteria for resolving troubled commercial loans, as follows:
1. Loan status: The loan is a troubled commercial loan, that is, the property is worth less than the amount owed, and the payments on the loan are not current or may soon not be current;
2. Lender: The loan is owned by a bank (1) which has a "troubled asset ratio" preferably not above 50% (see http://banktracker.investigativereportingworkshop.org), (2) which is not under any cease-and-desist or consent order by its regulator, and (3) which now holds the particular troubled loan in its loan portfolio without having sold or securitized it;
3. Minimum amount: The unpaid balance on the troubled loan or group of loans is $1 million or more;
4. Timing: At least 30 days remain before foreclosure;
5. Bankruptcy: No bankruptcy proceeding is pending regarding the borrower;
6. Relationship between lender and borrower: The borrower is a valued borrower whom the lender would like to retain as a customer, and the relationship between them is amicable;
7. Access: The borrower has access to the bank at the senior executive officer level; and
8. Debt service: The borrower will be able to meet the debt-service obligation for a new loan, newly underwritten by the bank in relation to the new, lower value of the property.
Please note carefully: Subject to contingencies on both sides (including a particular financial transaction between S.Crow Collateral Corp. and the bank), and subject to satisfaction of the above criteria, and subject to mutual agreement upon terms and conditions that are approved by the borrower and by S.Crow Collateral Corp., the latter will agree to purchase the property from the borrower at the amount the borrower now owes on the property, so that the borrower can pay the bank in full. S.Crow Collateral Corp. will then immediately sell the property back to the borrower at a lower price which is made possible by a new loan from the bank to the borrower and which the borrower can service. The arrangement for the new loan is solely between the borrower and the bank.
S.Crow Collateral Corp.’s financial transaction with the bank increases the bank’s Tier 1 capital and enables the bank to replace the existing troubled loan with U.S. Treasuries or U.S. agency securities. That takes the pain out of the deal for the bank, so that it can be willing to lend new money to the borrower and be comfortable with doing so.
S.Crow Collateral Corp. does not represent the borrower in obtaining a new loan or settling the existing one, because S.Crow Collateral Corp. is not an adviser or agent for anyone. Instead, S.Crow Collateral Corp. acts solely on its own behalf, as a principal, and therefore does not charge either the borrower or the bank any fee for any service. We make our money as a counterparty in the transactions in which we participate.
If you are the lender or the borrower in regard to a loan which satisfies the criteria stated above, you are welcome to contact us.—Stanley D. Crow, President, S.Crow Collateral Corp.
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The Latest Installment addresses situations, questions and issues which are brought to us in the course of the consideration, negotiation or execution of transactions. We don't use the real names of parties to transactions, and we may edit the statement of the question to try to tell the story better. Please feel free to comment, or to take issue, or to raise your own question or situation. If you do the latter, please do not relate any confidential information.
The Latest Installment blog is edited by Stanley D. Crow, who is president of S.Crow Collateral Corp.