Can this convoluted bit of "tax speak" be deciphered into plain English?

Solution 1:

Hoo boy.

The amount of nonrecourse debt in excess of the FMV of the property subject to the nonrecourse debt to the extent nonrecourse debt in excess of the FMV of the property subject to the debt is forgiven.

Some substitutions:

X = nonrecourse debt
X' = debt
Y = the FMV of the property
Z = Y subject to the X
Z' = Y subject to the X'

This gives us:

The amount of X in excess of Z to the extent X in excess of Z' is forgiven.

Adding the missing words (I think):

[Enter] the amount of X [which is] in excess of Z, to the extent [that] X in excess of Z' is forgiven.

Which I think can be translated to:

Enter the forgiven portion of the difference between X and Z

...Which is as far as I can get without knowing more about what the heck a nonrecourse debt is, and what does it mean to be subject to it.

Solution 2:

Having found the publication you referenced, I noticed two words that you left out that clear up the sentence a bit.

Liabilities include:
• The amount of nonrecourse debt in excess of the FMV of the property subject to the nonrecourse debt to the extent nonrecourse debt in excess of the FMV of the property subject to the debt is forgiven.

I'm going to add parentheses to help us understand the structure of this sentence:

Liabilities include   
(  
    (  
       (the amount of nonrecourse debt)  
       in excess of the FMV  
    )  
    of the property 
    subject to the  
        (nonrecourse debt)  
)  
to the extent [that]  
(  
    (  
        (nonrecourse debt)  
        in excess of the FMV  
    )  
    of the property subject to the debt is forgiven.  
)

In (somewhat) plain English:

Take the property that is subject to nonrecourse debt and find the Fair Market Value. Now find the amount of nonrecourse debt. Subtract the nonrecourse debt from the FMV. Even if the nonrecourse debt is forgiven, you must include it for tax purposes (in this instance, determining insolvency).

Disclaimer: I am not an attorney nor accountant and am not qualified in any way to give any legal or financial advice.

Solution 3:

IANAL.

First, after reading a bit about non-recourse debts and US tax law, I've realized that this might be a sentence fragment. Specifically, it refers to an amount, but that sentence no verb.

Second, a non-recourse debt is a debt which is secured against collateral (usually property) such that if the borrower defaults the lender can only take the collateral and nothing else; the rest of the debt is "forgiven". For tax purposes a forgiven debt is treated as income.

So this fragment says

The value of the debt which exceeds the value of that debt's collateral property, which was seized when the debt was forgiven

Or something along those lines.

Solution 4:

First, I am assuming this is a definition of a type of debt or an explanation of a value. Ok. So now let's give this a whirl:

Our value is:

The amount of nonrecourse debt in excess of X.

X is:

the FMV of the property subject to Y

Y is:

the nonrecourse debt to the extent [that] Z is forgiven.

Z is:

nonrecourse debt in excess of the FMV of the property subject to the debt

At least, that's the best I can do. I think this is intentionally obtuse to give attorneys something to argue over.