The in personam liability was discharged. The in rem lien still exists. The 1099-C is only supposed to be issued when the debt is uncollectible. It may not be enforceable in personam, but it certainly is still collectible
if borrower continues making payments. Lender can't continue to accept
payments and issue a 1099-C. It would be making a false representation tothe IRS of a bad debt to reduce its own taxes and then still collecting the
money from the borrower. Pursue it from that angle. Your client can
always challenge the issuance of the 1099-C with the IRS showing she is current
with her payments. In all likelihood, the 1099-C was issued by mistake byemployees out of their depth....
The bankruptcy discharge exception neuters the tax impact of the 1099-C
for the 2012 income taxes. If Lender is being paid, the net result will not
include its debt being counted in the tax attributes. Only those
discharged debts not being paid will be reduced from the property's basis.
Mark T. Jessee
Law Offices of Mark T. Jessee
"A Debt Relief Agency"
50 W. Hillcrest Drive, Suite 200
Thousand Oaks, CA 91360
(805) 497-5868 (805) 497-5864 (Facsimile)
In a message dated 4/10/2013 5:39:51 P.M. Pacific Daylight Time,
bertkawahara@yahoo.com writes:
Are there any magic words to convince Wells Fargo to change a 1099-C? My Chapter 7 client received a 1099-C for the entire 1st loan (not purchase money) on her home. The loan is current and she has equity and there has never
been a loan modification. Discharge entered in 2012. Following the
instructions for IRS form 982, the basis in her home is reduced to zero even
though she is continuing to pay the 1st.
Bert Kawahara
Doyle" wrote:
>
> Your client needs to consult with an accountant to answer the tax
> question. I am not an accountant, however the Mortgage Relief Act of
> 2007 was extended through 2013.
>
>
>
> Shannon A. Doyle
>
> Attorney at Law
>
>
>
> 100 N. Barranca Avenue, Suite 250
>
> West Covina, CA 91791-1600
>
> Tel: (626) 646-2555
>
> Fax: (626) 332-8644
>
>
www.blclaw.com
>
>
>
[mailto:
_cdcbaa@yahoogroups.com_ (mailto:
cdcbaa@yahoogroups.com) ] On Behalf
> Of sbombalier
> Sent: Friday, March 01, 2013 2:18 PM
> To:
_cdcbaa@yahoogroups.com_ (mailto:
cdcbaa@yahoogroups.com)
> Subject: [cdcbaa] LAM Debt Forgiveness & Tax Consequences
>
>
>
>
>
> Dear Members:
>
> I have a client in an active 13 and in 2009 we obtained an order on our
> LAM. We have now gotten an offer from WF offering to forgive the debt
> (same as the LAM).
>
> My question is: What are my clients' tax consequences, proceeding to
> termination of the 13 versus accepting the offer to forgive.
>
> The Mortgage Relief Actof 2007 provides for the reduction of any amounts
> reported via 1099, but this terminated in 2012. I believe my clients
> would be safe if they proceed with the active 13and not be subject to
> taxes on the LAM. However, would they have tax consequences if they
> accept the offer?
>
> As always any input is greatly appreciated.
>
> Silvia
>
The in personam liability was discharged. The in rem lien stillexists. The 1099-C is only supposed to be issued when the debt is
uncollectible. It may not be enforceable in personam, but it
certainly is still collectible if borrower continues making
payments. Lender can't continue to accept payments and issue a
1099-C. It would be making a false representation to the
IRS of a bad debt to reduce its own taxes and then still collecting
the money from the borrower. Pursue it from that angle.
Your client can always challenge the issuance of the 1099-C with the IRS showing
she is current with her payments. In all likelihood, the
1099-C was issued by mistake by employees out of their
depth....
The bankruptcy discharge exception neuters the tax impact of the
1099-C for the 2012 income taxes. If Lender is being paid, the
net result will not include its debt being counted in
the tax attributes. Only those discharged debts not being
paid will be reduced from the property's
basis.
Mark T.
JesseeLaw Offices of Mark T. Jessee"A Debt Relief Agency"50 W.Hillcrest Drive, Suite 200Thousand Oaks, CA 91360(805) 497-5868 (805)
497-5864 (Facsimile)
In a message dated 4/10/2013 5:39:51 P.M. Pacific Daylight Time,
bertkawahara@yahoo.com writes:
Are there any magic words to convince Wells Fargo to change a 1099-C? My
Chapter 7 client received a 1099-C for the entire 1st loan (not purchase money) on her home. The loan is current and she has equity and there has never
been a loan modification. Discharge entered in 2012. Following the
instructions for IRS form 982, the basis in her home is reduced to zero even
though she is continuing to pay the 1st.Bert Kawahara--- In
cdcbaa@yahoogroups.com, "Shannon
Doyle" <sdoyle@...> wrote:>> Your client needs to consult
with an accountant to answer the tax> question. I am not an accountant,
however the Mortgage Relief Act of> 2007 was extended through
2013.> > > > Shannon A. Doyle> >
Attorney at Law> > > > 100 N. Barranca Avenue,
Suite 250> > West Covina, CA 91791-1600> > Tel:
(626) 646-2555> > Fax: (626) 332-8644> >
titlemailto:
cdcbaa@yahoogroups.com
href"mailto:cdcbaa%40yahoogroups.com">
cdcbaa@yahoogroups.com [mailto:
cdcbaa@yahoogroups.com] On
Behalf> Of sbombalier> Sent: Friday, March 01, 2013 2:18
PM> To:
The post was migrated from Yahoo.