Tax Question: Cancelation of Debt Trap in Chapter
Posted: Wed Feb 15, 2012 3:41 pm
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The 2nd Td should file a proof of claim to be paid as an unsecured
creditor for the deficiency balance after the 1st forecloses. Lender
cannot issue a 1099c until the debt is uncollectable. It is not
uncollectable while the debtor is in a Chapter 13 case paying money to
unsecured creditors. Issuing a 1099c under such circumstances is
improper.
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)
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On Wed, 15 Feb 2012 14:27:42 -0800, "Steven B. Lever" wrote:
List mates:
FACTS: Rental property will be surrendered in Chapter 13 case and
there will be cancelation of indebtedness on the second mortgage.
ISSUE: If the mortgage holder issues a 1099C during one of the early
years of the case, will it be excluded from Gross Income, as the
discharge only comes much later?
RULE: If debt is discharged in bankruptcy first, there is not debt to
cancel; see IRC Section 108.
ANALYSIS: In a Chapter 7 the automatic stay holds off the
foreclosure and then typically the discharge is entered before the
foreclosure, or at least the same year. However, in a 13, if the
lender gets relief from stay and then forecloses the discharge will not
be until future years, long after the 1099C was issued. Perhaps the
IRS/FTB are precluded from assessing the tax in the 1099C year, bu t
that is unlikely because all Chapter 13 clients pay their taxes every
year, with at least the self-assessment of filing tax returns.
CONCLUSION: Thats what Im wondering.
Steve
Law Offices of Steven B. Lever
>
> Steven B. Lever
>( Tel. (562) 436-5456 ext. 6470
>( Fax (800) 360-5161
>* sblever@leverlaw.com
> www.leverlaw.com
> ******************************************************
start="4yni1sbm6288@webmail.mysuperpageshosting.com"
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p{margin: 0;padding: 0;}The 2nd Td should file a proof of
claim to be paid as an unsecured creditor for the deficiency balance after the
1st forecloses. Lender cannot issue a 1099c until the debt is
uncollectable. It is not uncollectable while the debtor is in a Chapter 13
case paying money to unsecured creditors. Issuing a 1099c under such
circumstances is improper.
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)NOTICE TO RECIPIENT: THIS E-MAIL IS
MEANT FOR ONLY THE INTENDED RECIPIENT OF THE TRANSMISSION, AND THIS
COMMUNICATION IS INTENDED TO BE PRIVILEGED BY LAW. IF YOU RECEIVED THIS E-MAIL
IN ERROR, ANY REVIEW, USE, DISSEMINATION, DISTRIBUTION, OR COPYING OF THIS
E-MAIL IS STRICTLY PROHIBITED. PLEASE NOTIFY US IMMEDIATELY OF THE ERROR BY
RETURN E-MAIL AND PLEASE DELETE THIS MESSAGE FROM YOUR SYSTEM. THANK YOU IN
ADVANCE FOR YOUR COOPERATION.
On Wed, 15 Feb 2012 14:27:42 -0800, "Steven B. Lever"
<sblever@leverlaw.com> wrote:
The post was migrated from Yahoo.