QUESTION
What should I do if I received a $15,000 tax notice due to cancellation of loan modificatior?
Asked on Apr 21st, 2015 on Taxation - Oregon
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.
3 ANSWERS
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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The first question is when was the mortgage forgiven? If this was in 2013 or older then there is probably no tax due on the transaction. But you're required to report it and show that it wasn't taxable. If it was in 2014, all or part isn't taxable if your debts exceeded the value of your assets when the loan was forgiven. In either case, you need to consult a tax attorney or a CPA who's familiar with tax law.
Answered on Apr 22nd, 2015 at 6:00 AM
Appellate Attorney serving Grosse Pointe Farms, MI
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Musilli Brennan Associates, PLLC
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See an attorney or accountant, generally forgiveness of debt is income to you but there are exceptions. You NEED professional advice.
Answered on Apr 21st, 2015 at 3:02 PM
This is probably a legitimate claim by the IRS. There are exceptions that can help you depending on your circumstances. Do some research on forgiveness of indebtedness income or contact a tax attorney.
Answered on Apr 21st, 2015 at 2:06 PM