Author Topic: can a legal 1099cbe issued without a judgement or settlement agreement?  (Read 30878 times)

0 Members and 1 Guest are viewing this topic.

E. Normis Debtor

  • Valued Member
  • Posts: 2433
Re: Is There a SOL on 1099C Forgiveness of Debt?
« Reply #15 on: December 21, 2007 10:34:21 PM »
When my BK is discharged in January, will I have to pay taxes on all the debts that are discharged! 
No.  And, they shouldn't be issuing a 1099 on a debt discharged in BK.
« Last Edit: December 21, 2007 10:35:56 PM by E. Normis Debtor »
I don't respond to PM's or emails for advice on specific circumstances.  My participation in this forum is general in nature, and not intended to create an attorney/client relationship.

Kitten

  • Valued Member
  • Posts: 2012
    • MCSD
Re: Is There a SOL on 1099C Forgiveness of Debt?
« Reply #16 on: December 21, 2007 10:49:26 PM »
BK is an exception to taxability of debt cancellation income.
I believe it's also an exception to the requirement to issue a 1099-C, so you probably won't be receiving a stack of 1099s a year later.

Shorty

  • Valued Member
  • Posts: 192
Re: Is There a SOL on 1099C Forgiveness of Debt?
« Reply #17 on: December 23, 2007 04:56:21 AM »
Thank you!  I was a tad bit worried there!

InAHole55

  • Valued Member
  • Posts: 11
Re: Is There a SOL on 1099C Forgiveness of Debt?
« Reply #18 on: December 23, 2007 08:28:26 PM »
As I understand, if you are insolvent during the year you receive your 1099C you do not have to pay the taxes.

ladyran

  • Valued Member
  • Posts: 53
Re: Is There a SOL on 1099C Forgiveness of Debt?
« Reply #19 on: January 18, 2008 11:08:58 PM »
What happens to the money that the OC gets when he sells the debt...  is it then used to reduce the amount actually owed??  Granted we are only talking pennies BUT that money must be accounted for somewhere...

Rottweiler

  • "SIT!" "Stay!" "Watch OUT!"
  • Valued Member
  • Posts: 6022
  • Talent does what it can; genius does what it must
    • Debtor Talk:  "Tough Love" for the Collection Industry.
Re: Is There a SOL on 1099C Forgiveness of Debt?
« Reply #20 on: January 19, 2008 02:55:14 AM »
The proceeds from debt sales by OCs DO NOT reduce the amount owed, but are treated as would the sale of any other asset, such as real estate, by debiting (deducting the value from) the asset account and crediting (adding the proceeds to) the appropriate income account, with the uncompensated asset value treated accordingly.


Flyingifr--a CPA--can explain this better than I.
“This is a court of law, young man, not a court of justice."
~ Olver Wendell Holmes

hardheaded52

  • Valued Member
  • Posts: 1
Re: Is There a SOL on 1099C Forgiveness of Debt?
« Reply #21 on: January 22, 2008 11:13:09 PM »
What about this example;

My husband filed chapter 7 and it was discharged 12/05. We had one joint account and he filed it in his BK. In 10/06 I settled the account with them for $4600 of a $10,700 balance. Borrowed from my 401K to pay the settlement. Today I get a 1099 for the entire amount and the 1099 has his name on it as well. Are they allowed to include his name if  he had it discharged in his BK? Actually it is his name and my name all run together to look like one name. Do we not get credit for the amount I paid? He filed BK due to lots of medical bills and credit card bills we had used to live on while he was out of work and my paycheck would not stretch far enough. We both have incurred more medical bills since his filing and barely can pay our mortgage, taxes, insurance plus monthly expenses. We do not use credit cards any longer.   How do we handle this? Thanks for any suggestions.



Flyingifr

  • -DEAN EMERITUS-
  • Valued Member
  • Posts: 8483
  • Welcome to my Temper Tantrum
Re: Is There a SOL on 1099C Forgiveness of Debt?
« Reply #22 on: January 25, 2008 12:33:49 PM »
If the two of you are filing a joint return, he would attach a note to the return showing that the discharged debt is not income under Section 108 due to the bankruptcy exception. You would attach a Balance Sheet showing that before you paid the debt you still owed more than you owned and you would take the Insolvency exception.

Since the creditor recieved some payment from you, the amount you paid was obviously not cancelled. The 1099C should show a reduction in the amount cancelled to reflect that. Unfortunately, many creditors look at the 1099C as just another collection letter and try to make their debtor pay as much tax as possible by not crediting payments made, backing out interest and fees or otherwise preparing the form correctly.
BTW-the Flyingifr Method does work. (quoted from Hannah on Infinite Credit, September 19, 2006)

I think of a telephone as a Debt Collector's crowbar. With such a device it is possible to pry one's mouth open wide enough to allow the insertion of a foot or two.

Debtors Exams are the perfect place for us Senior Citizens to show off our recently acquired Alzheimers.

Founder of the Credit Terrorist Training Camp (Debtorboards)

HeadsUp

  • Valued Member
  • Posts: 1141
  • judgment proof
Re: Is There a SOL on 1099C Forgiveness of Debt?
« Reply #23 on: August 19, 2008 11:31:58 PM »
Insolvency seems to be the critical factor in this.  One of my relatives received a 1099C, and had no idea what it was.  Then later received a nasty notice from the IRS demanding a large sum.  When he explained to them that he had nothing to pay them, no assets, nothing... they backed way off from their previous demands and accepted an offer in compromise of about 2% of what they had originally demanded.  They don't want to waste their time going after someone who has nothing.  As far as the threat of prison, that wouldn't help them collect any more money in this instance.  They didn't bother threatening it.

In comparison, when they came after one of my customers who had a lot of assets, they got every dime of it.

So insolvency when the 1099C was issued is important, but it's also important when the IRS comes a knockin' for their money.
Finally a collector admits it...

"The reality is that there are people who can't pay and the job of an agency in my opinion is to separate those who can and those who cant and to not waste resources and efforts on those who cant." -- Dr. Evil.

All this nonsense about aggressive judgment enforcement against someone with no assets is just that-- utter nonsense.

http://www.debtorboards.com/index.php?topic=13309.msg100303#msg100303

Rottweiler

  • "SIT!" "Stay!" "Watch OUT!"
  • Valued Member
  • Posts: 6022
  • Talent does what it can; genius does what it must
    • Debtor Talk:  "Tough Love" for the Collection Industry.
Re: Is There a SOL on 1099C Forgiveness of Debt?
« Reply #24 on: August 19, 2008 11:49:26 PM »
Since the creditor recieved some payment from you, the amount you paid was obviously not cancelled. The 1099C should show a reduction in the amount cancelled to reflect that. Unfortunately, many creditors look at the 1099C as just another collection letter and try to make their debtor pay as much tax as possible by not crediting payments made, backing out interest and fees or otherwise preparing the form correctly.

In the case of BK, wouldn't using the 1099C as a collection letter (an improper and possibly illegal use of the 1099C to begin with) be a violation of the Permanent Injunction and therefore also subjects the issuer to possible sanctions from the BK Court?

How better to get the creditor coming and going than this?  ;)
“This is a court of law, young man, not a court of justice."
~ Olver Wendell Holmes

Rasputin69

  • Valued Member
  • Posts: 92
Re: Is There a SOL on 1099C Forgiveness of Debt?
« Reply #25 on: February 03, 2009 12:21:03 AM »
I just received a 1099 from the credit card company showing a debt of 15k was cancelled on 12/31/2008.  I disputed this debt from the beginning and there was never a validation, they just kept passing it from one CA to another, as late as October.  Other than the "insolvency option," is there any way to attack or challenge the 1099/cancellation with the IRS because it is disputed?

I seem to remember something Flyingifr or someone else once wrote on how to challenge the 1099 after a settlement for less than the entire debt, but I have no idea how that would work if you disputed the entire amount from the beginning.

HeadsUp

  • Valued Member
  • Posts: 1141
  • judgment proof
Re: Is There a SOL on 1099C Forgiveness of Debt?
« Reply #26 on: February 15, 2009 09:32:58 PM »
Okay, I got the form downloaded to claim insolvency and send to the IRS.

I am, as always, very insolvent.  So, there shouldn't be any problem.

But, let's just say they still come after me for the taxes...

What is the statute of limitations for the IRS to collect these taxes after I file my 1040 for 2008?

3 Years?

And after that, if they haven't been able to collect those taxes, it's all over, right?
Finally a collector admits it...

"The reality is that there are people who can't pay and the job of an agency in my opinion is to separate those who can and those who cant and to not waste resources and efforts on those who cant." -- Dr. Evil.

All this nonsense about aggressive judgment enforcement against someone with no assets is just that-- utter nonsense.

http://www.debtorboards.com/index.php?topic=13309.msg100303#msg100303

retnec

  • Valued Member
  • Posts: 147
Re: Is There a SOL on 1099C Forgiveness of Debt?
« Reply #27 on: September 18, 2009 01:48:09 PM »
i saw where someone on this board had stated some states had laws view the issue of 1099c as a cancellation of debt.

does anyone know what fl laws are?
THANK YOU for tolerating and humoring my ignorance as i am new to the game

flacorps

  • Valued Member
  • Posts: 1065
  • Author of Debt Hope in Trade Paperback
    • Learn to Solve Your Own Debt Problems
Re: Is There a SOL on 1099C Forgiveness of Debt?
« Reply #28 on: November 10, 2009 06:08:14 PM »
I believe Florida courts have not yet addressed the issue.
"History has taught us that weakness is provocative. To the extent that people see an area of weakness, they will take advantage of it..." - Donald Rumsfeld

http://www.myhopeseries.com

poorman

  • Valued Member
  • Posts: 1
Re: Is There a SOL on 1099C Forgiveness of Debt?
« Reply #29 on: May 20, 2010 10:31:18 PM »
Your problem is the reason I am on here tonight. I settled with 2 card compaines last year (09)for 25% and cannot get them to send me a 1099 for the 75%. Seeing as how I started the year with a $54,000.00 loss I really want to claim the income in that year. Are they legally obligated to send them out?