They're supposed to be out by Feb. 2. If you get one, as a result of a settlement, update here and we'll talk about how to handle them.
If you're talking about form 1099C Cancellation of Debt, here's how (from an Enrolled Agent): 1. IF the 1099C was as a result of the debt being cancelled in Bankruptcy, attach Page 1 of your petition to your tax return with a note that the cancelled debt income is excludable from income under IRC 108(a). 2. IF, after the discharge of indebtedness, you are still insolvent (liabilities exceeed assets) then attach a simple balance sheet to your tax return and claim the cancelled debt excludable from income under IRC 108(a)(1)(B). 3. IF you followed the advice I posted on these boards many times and included in the sttlement documents a statement that you are only paying the undisputed amount and the unpaid amount is disputed and the creditor acknowledges the dispute, then attach a copy of the Settlemnt agreement to your tax return and claim the cancelled debt as excludable from income under Zarin v Commissioner (916 F2d 110 - 3rd Cir, 1990). 4. IF the debt is a purchase money debt and you were able to negotiate with your creditor a statemernt that the portion paid represents an Adjustment of the Purchase price of the goods bought, then attach that statement to your return and exclude the cancelled debt income under IRC 108(e)(5). 5. IF the cancelled debt is a student loan forgiven or partially forgiven because you worked in certain professions under an acknowledged forgiveness program, attach a note saying this and exclude the debt forgiveness income under IRC 108(f). 6. If none of these applies, include the cancelleed debt as OTHER INCOME (Form 1040 Line 21).
Re: Re: Start Watching For Those 1099's Thanks Flying. Also - if the "debt" was deductable, had you paid it in the first place, it needn't be reported as income. This is outlined in the 1099-c instruction set, forms and pubs. But here's what I was thinking; The entire taxation concept is based upon the debts legitimacy. Scenario: Consumer argues the debt as not mine, and the OC/CA fails to prove it is his. But consumer decides to pay "just to be rid of the problem". A settlement was paid "under protest", even after the OC FAILED to prove the debt. Why couldn't I argue that the debt never REALLY existed in the first place, so I'll be damned if I'm paying tax on it. In the 1099-c pub. it says; "The Debt" "The Debt" "The Debt" I'm suggesting that this contemplates the debt is valid. Whatcha think? ???
I wonder if the IRS would 1099 you on the OIC settlement delta. Geezus i'd be back to square one if so. lol.
Re: Re: Start Watching For Those 1099's LOL Boy that would start a hell of a vicious circle wouldn't it? .
Re: Re: Re: Start Watching For Those 1099's This scenario would be covbered in #3 in my post - disputed debt. the debt can be disputed in full or in part. The instructions for ANY IRS form always assume complete legitimacy of the item. After all, we all know that NO ONE EVER files a false tax form, right????? (and we all know the Easter Bunny brings Easter Eggs, too).
Re: Re: Start Watching For Those 1099's IRS does not 1099C for OIC's. Debt forgiven in an OIC is not taxable income. Regs 1.6050P-1(a)(3). Nevertheless, froma practical standpoint, for an offer to be accepted by the IRS using the IRS formula, the taxpayer would have to be insolvent afterwards anyway, since the formula requires the Taxpayer to pay the quick sale value of all assets to the IRS.
Are you suggesting he doesn't? I have been mislead all these years? Next thing, someone is going to tell me that $1 under my pillow WASN'T from the tooth fairy.
ALL YEAR???!!!? I thought it was only starting in the fall (maybe around Halloween) that he really started paying attention. Being good for a WHOLE YEAR is really hard!
Re: Re: Start Watching For Those 1099's The Tooth Fairy and Santa Claus too, Doc? Or just the 1099s? Inquiring minds want to know!
Re: Re: Start Watching For Those 10 I included IRS Form 982 with tax return after my BK. http://www.irs.gov/pub/irs-pdf/f982.pdf Reduction of Tax Attributes Due to Discharge of Indebtedness
Re: Re: Re: Start Watching For Those 10 Form 982 re-sets tax attributes, bytr does nothing to explain to a cynical and critical auditor why you failed to declare income.
damn i hate those 1099-INT's always straggling in. Sometimes i'll forget about it if its like $1.00 in interest. lol.
Re: Re: Re: Start Watching For Those 10 A little note about my 1099 experience. A few year ago I worked from home as a website designer. I had about 10 clients. I waited until about February 5th to file my taxes to make sure that everyone that was going to 1099 me had time to do so. Well the day after I filed I got a 1099 from one of my clients. It was post marked February 3rd. I just put it in the file with the rest of my tax paper work. About 2 years later I get a adjustment letter from the IRS saying that I owed and additional $757 in income tax (the 1099 was for 4k). I was able to prove to the IRS agent that I did not receive the 1099 in a timely manner, and he said thank you have a nice day. I found out later from a friend that worked at the company that they ended up having to pay my tax, and they were also fined 10k by the IRS for not getting their documents in the mail by 1/31. Apparently I was not the only sub-contractor that had issues with them. Check the postmark on your 1099's, if it is after Jan 31, file it away and act like you never got it.
