QUESTION
How is it possible that I owe IRS if the amount of my properties exceeded my debt?
Asked on Apr 07th, 2013 on Taxation - California
More details to this question:
I filed chapter 7 in 2011 and it has been discharged. In 2012, I lost 2 other properties in foreclosure. The bank bought them for $129,000 and I only owed $90,000. Now my account states I owe the Internal Revenue Services $24,000.
1 ANSWER
Bruce Givner
You apparently have "CODI" - cancellation of debt income. That probably occurred because your basis in the property exceeded the debt. There are ways to avoid CODI. For that you must refer to Internal Revenue Code Section 108. If you cannot pay the IRS then, of course, there is always the possibility of entering into an installment payment agreement or, if you will never be able to pay the IRS, an offer in compromise.
Answered on Apr 08th, 2013 at 9:38 PM