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1099C Cancellation of Debt big question?
In 2009 my husband and I filed personal BK. In our BK filing we included all of our business debt. We received our discharge in July 2009. This year both my husband and I each received a 1099C from BoA with the exact same info. Here is the what the 1099C says on each (same info):
IRS Box #1 Acct #XXXXXX, Business Card, Date Canceled 09/03/10
Box # 2 Amt Debt Canceled $XXXXXX
Box #4 Business BK, Discharged Debt
Box #5 Borrower Was Personally Liable for Repayment of Debt
Box #6 Debt Discharged in BK
Today I had an appt with an organization the gives free tax help for low income people. They said they could not help with our taxes because of these 1099Cs, beyond their scope. He says that he believes BoA is holding us personally responsible for the business debt and therefore we would have to pay taxes on the debt and should really talk to an tax accountant and have them prepare the tax return.
Please someone help. Explain. How can this be if we were discharged of all our debt including the business debt in 2009? Can't afford to to pay an accountant and we certainly dont want to be held liable for debt that was already discharged. I am freaking our because the guy says it look like we may be liable to pay taxes on double the debt. Help!!!!!!
5 Answers
- Anonymous1 decade agoFavorite Answer
The low-income tax people can't handle the 2nd part of the form 982.
You fill out 982, list it as bankruptcy and the debt, but you need to see PUB 4681 for the "tax attribute reduction" part.
- ReenaLv 71 decade ago
You aren't asked to repay the debt... you are being asked to pay the taxes due on the money that you no longer have to repay. What happened is this: You owed money to the bank, it was discharged in BK that makes that money that you borrowed once upon a time an "income" and we pay taxes on our income. You had the money, it was supposed to be paid back to the bank. That is no longer the case now you owe taxes on that money.
You will need a tax consultant and no, I am not an expert in this. Please find the money for a good CPA otherwise the IRS will come after your wages.
- mrreliable3599Lv 71 decade ago
Unfortunately you can't afford not to pay an accountant.
No, you should not be double-billed for the amount.
Yes, cancelled debt is considered taxable income.
There are exclusions for insolvency, but you need an accountant to see if you qualify.
- Anonymous1 decade ago
If the debt was discharged in bankruptcy, you do not have taxable income from cancellation of indebtedness.
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- Anonymous1 decade ago
I can absolutely help you take care of this situation. Please contact me at taxresolutionexperts@yahoo.com. I'll give you my direct contact information and we can discuss this situation and how to best help you resolve it.
