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It is my understanding that the bank that has cancelled a debt and issued a 1099C for it, reserves the right to go after the debtor in the future. Furthermore, my 1099C created significant tax obligations that I cannot afford. If I were to file for a chapter 7 bankruptcy, would I be able to include my 1099C from 2 years ago in that bankruptcy filing? Thank you.
7 ANSWERS
Did you file form 982 for the year you received the 1099c? As you describe it, you now owe the IRS for the 2009 tax year, which will not be dischargeable until April of 2013 at the earliest.
Answered on Jan 16th, 2012 at 8:46 AM
Bankruptcy Attorney serving Hampton, VA
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Haven Law Group, P.C.
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Absolutely. You must include that 1099C. It will be discharged.
Answered on Jan 13th, 2012 at 2:24 PM
Business Bankruptcy Attorney serving Raleigh, NC
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J.M. Cook, P.A.
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If the issue is the 1099C incurred a tax obligation, the question is whether this was your primary residence? If it was your residence, there was an adjustment under the Homeowners' Relief Act that would allow you to not have to show this as income. Your accountant can fill in the details on this. If this isn't your residence and this happened two years ago, it relates a tax obligation that is not old enough to be dischargeable in bankruptcy. In either case, you could discharge the liability for the deficiency if that is the main intent through a bankruptcy.
Answered on Jan 13th, 2012 at 12:44 PM
Bankruptcy Chapter 11 Attorney serving Dacula, GA
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Chronister Law Firm, LLC
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Tax debts that are older than 3 years old from the date of filing are dischargeable. From the information you have provided, it does not appear that this tax debt would be discharged.
Answered on Jan 13th, 2012 at 8:49 AM
Glen Edward Ashman
No. Taxes are not dischargeable. However the debt is. See a good CPA to see if you could have avoided tax in the past tax year, and if you qualify, amend that return.
Answered on Jan 13th, 2012 at 8:48 AM
Bankruptcy Attorney serving Seattle, WA
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The Law Office of Marc S. Stern
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If you were insolvent at the time, the 1099 does not produce taxable income. However, if you were solvent, it does. The income tax liability, if it was properly assessed becomes a non-dischargeable debt and is reportable on the 1040 return. It is dischargeable when income tax from that 1040 return would be dischargeable. There is a specific form from the IRS to respond to an improper 1099.
Answered on Jan 13th, 2012 at 8:41 AM
Chapter 7 Bankruptcy Attorney serving Huntington Beach, CA
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Law Offices of Robert Parkinson Taylor
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You may want to talk to a good tax guy/CPA. To the extent you owe income tax based on debt forgiveness, you may be able to bankrupt it, but the soonest that would be a possibility would be 3 years from the date the return was due. That said, if you have little in the way of assets, you may be able to avoid the tax through the insolvency exception. Talk to a tax guy and search the internet for "IRS Form 982" and read the attached instructions, specifically for line "1b" which is on page 3. Good luck!
Answered on Jan 13th, 2012 at 8:37 AM