### Question
How does the law define net income from foreclosure property?


### Answer
Under *26 U.S.C. § 857*, **net income from foreclosure property** is defined as:

> the excess of—


(i) gain from the sale or other disposition of foreclosure property described in section 1221(1) and the gross income for the taxable year derived from foreclosure property (as defined in section 856(e)), but only to the extent such gross income is not described in subparagraph (A), (B), (C), (D), (E), or (G) of section 856(c)(3), over


(ii) the deductions allowed by this chapter which are directly connected with the production of the income referred to in clause (i)

#### Citation:
  - *26 U.S.C. § 857*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter M-Regulated Investment Companies and Real Estate Investment Trusts > PART II-REAL ESTATE INVESTMENT TRUSTS**

