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Chapter: 1600 Assets Program: MSSI, SFP 14

1640.0406 Determining Asset Value (MSSI, SFP) The amount of the asset included is the actual value of the asset minus indebtedness. Indebtedness is the amount needed to satisfy contract terms that must be met to establish ownership of the asset. Do not count income as an asset in the month received. This does not apply to SSI lump sums (see 2640.0421). Any income which is not spent in the month received becomes an asset the month following the month of receipt. Therefore, when determining asset value in a particular month, it may be necessary to deduct income added to the asset that same month.

Cash value and indebtedness determinations will be discussed for each type of asset. 1640.0407 Definition of Actual Value (MSSI, SFP) For assets that are in cash, or payable in cash on demand, the actual value is the cash value. For other forms of assets, the actual value is the fair market value (the amount of cash that could be received by selling or converting the asset). 1640.0408 Determining Asset Value (MSSI, SFP) The countable value of an asset is the equity an individual or couple has in the asset. In some cases, the asset value counted toward the applicable asset limit is first reduced by an allowable excluded amount.

Equity value is the amount that an asset can expect to sell for on the open market in the particular geographic area involved (that is the fair market value of the asset), less any legal debt on the asset.

Debts are any form of legal indebtedness against the asset in question, such as:

1. mortgages, 2. liens, 3. loans, 4. purchase contracts, or 5. security interests.

Only the amount of the principal owed and any prepayment penalty required by such a debt is deducted from the fair market value in establishing the equity value of the asset.

Any future interest owed as a result of the asset is not considered in establishing equity value.

Outstanding checks that have not cleared the bank yet are considered a form of legal indebtedness against the asset. 1640.0409 Conversion of Assets (MSSI, SFP) Proceeds, including cash, from the sale of an asset or conversion of an asset from one form to another are considered assets rather than income. The proceeds of the item to which the asset is converted must be evaluated to determine if they affect eligibility, and if so, the value of the new asset.

Verification concerning the new asset must be obtained regardless of whether a liquid or nonliquid asset is involved. For example, an individual may have an automobile (nonliquid asset) which he sells for cash (liquid asset), or he may have cash, which he uses to purchase an automobile. In either case, the conversion or sale does not result in income to the individual. The newly acquired item is an asset subject to all asset valuation policy.