QUESTION
What can I do if I received a $15,000 tax notice due to cancellation of loan modification debt? How?
Asked on Apr 29th, 2015 on Taxation - Ohio
More details to this question:
Litton Loan sent a 1099 to the IRS saying I had extra income of 48,000. I never received a 1099 from them. Now the IRS is saying I owe them $15,000. What can I do? In all the paper work I signed with my loan modification I was never told the fact they were writing off a debt that would be income to me.
1 ANSWER
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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Loan cancellation is only taxable income if you're solvent - meaning your assets are worth more than your debts. If they cancelled the loan chances are you didn't have the money to repay it, so you'll need to amend your tax return to show that the $48,000 isn't income.
Answered on Apr 30th, 2015 at 2:33 AM