Treasury Regulations · 26 CFR
§ 1.166-6. Sale of mortgaged or pledged property.
Regulation text, no changes From the eCFR, current as of October 15, 2026. The eCFR is an authoritative but unofficial editorial compilation of the Code of Federal Regulations; the official text is the annual CFR on govinfo. Compare it with this section on ecfr.gov (external site) or the official annual CFR on govinfo (external site).
Regulation under 26 U.S.C. § 166
Cite as 26 CFR § 1.166-6
At a glance
Read from the text and its source citation. Not part of the regulation.
- Status
- In the current eCFR
- Issued
- November 26, 1960 by T.D. 6500
- Last amended
- April 13, 1967 by T.D. 6916
- Issued under
- 26 U.S.C. § 166
- Length
- 443 words · about 2 min to read
- Cross-references
- cites 2 Code sections and 2 regulations; cited by 1
¶(a) Deficiency deductible as bad debt—
¶(1) Principal amount. If mortgaged or pledged property is lawfully sold (whether to the creditor or another purchaser) for less than the amount of the debt, and the portion of the indebtedness remaining unsatisfied after the sale is wholly or partially uncollectible, the mortgagee or pledgee may deduct such amount under section 166(a) (to the extent that it constitutes capital or represents an item the income from which has been returned by him) as a bad debt for the taxable year in which it becomes wholly worthless or is charged off as partially worthless. See § 1.166-3.
¶(2) Accrued interest. Accrued interest may be included as part of the deduction allowable under this paragraph, but only if it has previously been returned as income.
¶(b) Realization of gain or loss—
¶(1) Determination of amount. If, in the case of a sale described in paragraph (a) of this section, the creditor buys in the mortgaged or pledged property, loss or gain is also realized, measured by the difference between the amount of those obligations of the debtor which are applied to the purchase or bid price of the property (to the extent that such obligations constitute capital or represent an item the income from which has been returned by the creditor) and the fair market value of the property.
¶(2) Fair market value defined. The fair market value of the property for this purpose shall, in the absence of clear and convincing proof to the contrary, be presumed to be the amount for which it is bid in by the taxpayer.
¶(c) Basis of property purchased. If the creditor subsequently sells the property so acquired, the basis for determining gain or loss upon the subsequent sale is the fair market value of the property at the date of its acquisition by the creditor.
¶(e) Special rules applicable to certain reacquisitions of real property. Notwithstanding this section, special rules apply for taxable years beginning after September 2, 1964 (and for certain taxable years beginning after December 31, 1957), to the gain or loss on certain reacquisitions of real property, to indebtedness remaining unsatisfied as a result of such reacquisitions, and to the basis of the reacquired real property. See §§ 1.1038-1 through 1.1038-3.
[T.D. 6500, 25 FR 11402, Nov. 26, 1960, as amended by T.D. 6814, 30 FR 4472, Apr. 7, 1965, T.D. 6916, 32 FR 5923, Apr. 13, 1967]
Cross-references
Computed from the citations in the text of 26 CFR.
Code sections it cites
Regulations it cites
- § 1.166-3 Partial or total worthlessness.
- § 1.1038-1 Reacquisitions of real property in satisfaction of indebtedness.
Cited by 1 other regulation
Amendment history
From the source citation at the end of the section, newest first. T.D. is a Treasury decision; FR is the Federal Register.
- Amended by T.D. 6916 (32 FR 5923)
- Amended by T.D. 6814 (30 FR 4472)
- Issued by T.D. 6500 (25 FR 11402)
Where it sits in 26 CFR
- Subchapter A Income tax
- Part 1 Income taxes
- Itemized Deductions for Individuals and Corporations
Nearby sections
- § 1.166-2 Evidence of worthlessness.
- § 1.166-3 Partial or total worthlessness.
- § 1.166-4 Reserve for bad debts.
- § 1.166-5 Nonbusiness debts.
- § 1.166-6 Sale of mortgaged or pledged property.
- § 1.166-7 Worthless bonds issued by an individual.
- § 1.166-8 Losses of guarantors, endorsers, and indemnitors incurred on agreements made before January 1, 1976.
- § 1.166-9 Losses of guarantors, endorsers, and indemnitors incurred, on agreements made after December 31, 1975, in taxable years beginning after such date.
- § 1.166-10 Reserve for guaranteed debt obligations.