Since you did not provide any context for your question, I assumed your context was related to dealer dispositions and answered accordingly.When you are asking an income tax related question in a tax forum, the language you use has specific meanings to the IRS that may not conform to your intended meaning.

There are some on these forums who suggest that if you only do one flip and never do another one, you can "get away" with treating the flip as as investment property sale, but this does not conform to the strict definition of a dealer disposition.

If you have held low-income housing at least 16 years and 8 months, the percentage is zero and no ordinary income will result from its disposition. 

I would make sure that you clearly define the security deposit disposition procedures and what the expectations are for the disbursement of funds for the security deposit.

California’s Bus & Prof Code §17500 statute provides: “It is unlawful for any person, firm, corporation or association, or any employee thereof with intent directly or indirectly to dispose of real or personal property or to perform services, professional or otherwise, or anything of any nature whatsoever or to induce the public to enter into any obligation relating thereto, to make or disseminate or cause to be made or disseminated before the public in this state, or to make or disseminate or cause to be made or disseminated from this state before the public in any state, in any newspaper or other publication, or any advertising device, or by public outcry or proclamation, or in any other manner or means whatever, including over the Internet, any statement, concerning that real or personal property or those services, professional or otherwise, or concerning any circumstance or matter of fact connected with the proposed performance or disposition thereof, which is untrue or misleading, and which is known, or which by the exercise of reasonable care should be known, to be untrue or misleading, or for any person, firm, or corporation to so make or disseminate or cause to be so made or disseminated any such statement as part of a plan or scheme with the intent not to sell that personal property or those services, professional or otherwise, so advertised at the price stated therein, or as so advertised.

@Mark Nolan I read through the rules you linked to and it seems like the IRS keeps things a little vague with this:Gains and losses from disposition of property.

High earner should generally invest 85% in the safe market and 15% of the aggressive market ( start-ups).  3) If you have rentals and are such a high earner, you can hire your children so that they don't have to pay taxes on some of your income ( limited to standard deduction) or pay them more than the standard deduction and they still pay fewer taxes.  4) You can time the disposition of the rental property right so that when you have very high income in a year, you can dispose the rental property and use all the suspended passive loss that you were not allowed to take because of your high earnings in the prior year ( this loss can be substantial)  5) if you plan it right, you can convert some of the personal purchases to rental expenses ( lawn mowers, Ipads, laptops  you get it)6) some of the vacation travel might be planned right to make it a business trip and get tax deductions.There are much more.. so get started :)  

Even though the profit from a dealer disposition is recognized in full and taxable in full in the year of sale, even if an installment sale is used, I don't know if recognizing the gain taxed as self-employment income can still be contributed to your 401k if you have not actually received it.Maybe your 401k custodian should answer the question about the source of income that can be contributed.

Assuming that the cancellation of debt is a different calculation than for an actual deficiency judgement...I believe the cancelation of debt amount is simply the difference between what you owed including lender's costs, and what the lender nets from the eventual disposition.

(d) A lender may not exercise its option pursuant to a due-on-sale clause upon--, (1) the creation of a lien or other encumbrance subordinate to the lender's security instrument which does not relate to a transfer of rights of occupancy in the property; (2) the creation of a purchase money security interest for household appliances; (3) a transfer by devise, descent, or operation of law on the death of a joint tenant or tenant by the entirety; (4) the granting of a leasehold interest of three years or less not containing an option to purchase; (5) a transfer to a relative resulting from the death of a borrower; (6) a transfer where the spouse or children of the borrower become an owner of the property; (7) a transfer resulting from a decree of a dissolution of marriage, legal separation agreement, or from an incidental property settlement agreement, by which the spouse of the borrower becomes an owner of the property; (8) a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property; or (9) any other transfer or disposition described in regulations prescribed by the Federal Home Loan Bank Board.