.jpg)
1099 after completing Ch 13 LAM
Robert:
You are welcome. BTW, I took every tax class they offered at Loyola Law School, tax 1, tax 2, corp tax, partnership tax, estate tax and business and tax planning. I wrote the bankruptcy chapter in the CCH tax collection manualswithBob Schriebman for 10 years. But just listening to guys like Elmer Dean Martain lets me know I should have kept studying.
I list the first as a class 2, leave the second for class 5, and list in the misc provisions we will file a lam motion, or adversary, depending on the Judge, to strip the 2nd.
dennis
The post was migrated from Yahoo.
Thanks for the feedback Dennis:
I did not intend to be flippant. I now understand the human in a C13
gets a
discharge like a C7, in personam, so no recourse debt.
But I appreciate your answer so much because you have added to my
understanding
beyond the scope of my questions.
Now, I just want to know how to correctly report the LAM and the note
with 1st TD
on the C13 plan to complete the lesson.
Just Curious not flippant and thank you for your time directing the
listserve. It has helped a lot.
So is the a) note with b) 1st TD listed as a class 2 obligation, and theunsecured 2nd omitted from class 2 because it is being stripped?
Sincerely yours,
Robert
In a message dated 2/8/2010 7:25:35 P.M. Pacific Standard Time,
easky1@yahoo.com writes:
Robert:
Please don't be so filppant to our president.
You haven't grasped the basic concept that the estate and the human are
different entities.
The human gets the discharge, so what difference does it matter what classthe claim is to the estate?
It will be the human who files the tax return after the case is closed,
not the estate. The human will have been discharged of the 1st and the 2nd
(unless there is a reaffirmation of a mortgage, something most of us do not
approve.) The discharge is from the bk court, so no tax. A later
disposition is under your facts, irrelevant (i.e. no tax).
The more interesting set of facts, which I discussed with Ken Schwartz
some years ago, is when the debtor keeps the property and it appreciates. A
later disposition can actually be a very complicated mess, because depending
on the amount of debt dischaged, the debtor may have little or no basis inthe property.
dennis
wrote:
The post was migrated from Yahoo.
Robert:
Please don't be so filppant to our president.
You haven't grasped the basic concept that the estate and the human are different entities.
The human gets the discharge, so what difference does it matter what class the claim is to the estate?
It will be the human who files the tax return after the case is closed, not the estate. The human will have been discharged of the 1st and the 2nd (unless there is a reaffirmation of a mortgage, something most of us do notapprove.) The discharge is from the bk court, so no tax.The more interesting set of facts, which I discussed with Ken Schwartz some years ago, is when the debtor keeps the property and it appreciates. A later disposition can actually be a very complicated mess, because depending on the amount of debt dischaged, the debtor may have little or no basis in the property.
dennis
The post was migrated from Yahoo.
Excellent answer. Thank you.
So is the note/1st TD listed as a class 2 obligation, and the unsecured
2nd omitted from
class 2 because it is being stripped?
That should do it.
Thank you
In a message dated 2/8/2010 2:57:15 P.M. Pacific Standard Time,
pat@fitzgreenlaw.com writes:
Robert:
The LAM motion has nothing to do with the dischargeability of either the
first or the second. Trust deeds are not discharged, the debtors personal
liability for their debts are discharged. Debts are discharged under
in 523.
There is no exceptions for secured debts. They are discharged, but debtors
have to keep paying them because there is a lien on their property that
does not disappear and would therefore allow the discharged secured creditor
to foreclose if they stopped paying. The stripping of a 2nd under a LAM
means that the note holder no longer has security for their debt, which isdifferent from the discharge. Thus at the end of the 13 the debtorpersonal liability for the note which is secured by the 1st TD is discharged and
she does not have any debt to be forgiven, whether or not the debt had been
a recourse debt.
If you have any questions or concerns, please contact me.
Pat
Patrick T. Green, Esq.
Fitzgerald & Green
Attorneys at Law
1010 E. Union Street
Suite 206
Pasadena, CA 91106
Tel: 626-449-8433
Fax: 626-449-0565
pat@fitzgreenlaw.pat
Of robert90701@robert9
Sent: Sunday, February 07, 2010 9:42 PM
To: cdcbaa@yahoogroups. cd
Subject: Re: [cdcbaa] 1099 after completing Ch 13 LAM
My Closing Statement.
I will now explain how non recourse loan creates COD (cancellation of
debt) income below. Fasten your seat belts for this one.
First a review of the facts.
The facts stated "Client is about 15 months away from completing a Chapter13 lien-strip (LAM) case. He may want to walk away from his house after
the ch 13 discharge.
It is likely that the house will still be upside down. Value was $150,000less than the 1st DOT balance when the case was filed." [boldness and
underlining added]
"Lets assume for the purposes of this question, the loan is a non-purchase money 1st DOT."
1. The facts stated it was "a non purchase money 1st TD".
a. That means it may not qualify for the Federal Exclusion for COD
income at all.
b. Non purchase money debt is recourse debt.
2. A 1st TD is not discharged with a LAM motion, which is the subject
matter of this case. It had to be a 2nd that was discharged because that is
what a LAM motion is for. The 1st rides through the C13 in tact. The 1st
cannot be bifurcated into secured and unsecured on a personal residence and
the character of the first would not change into nonrecourse unless so
stated in the C13 plan, which is improbable.
I have clearly stated my reasoning. Now state, in detail, to all of us, how a recourse note secured by a 1st trust deed morphed into non-recoursedebt in a C13 LAM plan.
Good Luck starts with a strategy and a plan. Form a strategic alliance
with
Robert J. Suhajda, MS,CPA
17721 Norwalk Blvd. #43
Artesia, CA 90701
562-924-8922
Income Tax for Attorneys, Bankruptcy, IRS representation,
Fiduciary income tax returns, Estate and Gift tax returns,
Trust Protector, Independent Trustee, Court Accountings
1st was discharged, during the bk, with no income, and became nonrecourse. Plz explain how a nonrecourse loan can create discharge of indebtedness income?
Dennis McGoldrick
350 S. Crenshaw Bl., #A207B
Torrance, CA 90503
On Feb 6, 2010, at 8:26 PM, _robert90701@robert9_
(mailto:robert90701@aol.com) wrote:
Ladies and Gentlemen of the Jury. Thank you for you time and attention.
You read the facts and don't the facts of the case say an unsecured 2nd
was stripped in the C13 and the
1st remains after the C13 discharge, which is entirely possible? Now if
the debtor abandons
the house after the C13 discharge what are the tax consequences? Because
it is still under water
and the debtor may be personally liable for the 1st, it is treated as a
disposition, thereby creating
a gain or loss.
Next question is whether there is COD income is realized due to the firstand there would be COD
income because the facts stated the Debt > FMV, which answers the question presented.
Next question is whether the COD income is recognized? If the house
meets the requirements
for qualified personal residence indebtedness up to $2M could be excludedfrom Fed income,
but not for California because it never did and no longer conforms to the Feds.
I rest my case.
Good Luck starts with a strategy and a plan. Form a strategic alliance
with
Robert J. Suhajda, MS,CPA
17721 Norwalk Blvd. #43
Artesia, CA 90701
562-924-8922
Income Tax for Attorneys, Bankruptcy, IRS representation,
Fiduciary income tax returns, Estate and Gift tax returns,
Trust Protector, Independent Trustee, Court Accountings
In a message dated 2/5/2010 11:45:29 P.M. Pacific Standard Time,
mjessee@jesseelaw.In a messag
I concur in the entirety with Dennis. If the debt is discharged in the
Chapter 13 or even if converted and discharged in a Chapter 7, the first
second, third, etc trust deeds are all discharged and there is no discharge of
indebtedness income regardless of whether a creditor later issues a 1099
for discharge of indebtedness income. As I recall there was a federal
statute enacted last year that set forth an additional exception to discharge of
indebtedness income that if this is an unpaid loan on a personal residence it would not be subject to discharge of indebtedness income anyway
regardless of the bankruptcy discharge.
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
On Fri 5/02/10 11:20 PM , Dennis McGoldrick easky1@yahoo.On Fri 5/
The debt will be discharged at the end of the 13. Someone may say it
happens later, but debts are only discharged once. Read 26 USC 108.
Dennis McGoldrick
350 S. Crenshaw Bl., #A207B
Torrance, CA 90503
On Feb 5, 2010, at 8:36 AM, "Justin H" wrote:
Client is about 15 months away from completing a Chapter 13 lien-strip
(lam) case.
He may want to walk away from his house after the ch 13 discharge.
It is likely that the house will still be upside down. Value was $150,000less than the 1st DOT balance when the case was filed.
If the Debtor were to receive a 1099 debt forgiveness letter from the
lender, would he have to claim the debt forgiveness as taxable income?
Lets assume for the purposes of this question, the loan is a non-purchasemoney 1st DOT.
I guess it is also fair to ask whether there would be debt forgiveness
liability had the client never filed bankruptcy to begin with.
Excellent answer. Thank you.
So is the note/1st TD listed as a class 2 obligation, and the
unsecured 2nd omitted from
class 2 because it is being stripped?
That should do it.
Thank you
In a message dated 2/8/2010 2:57:15 P.M. Pacific Standard Time,
pat@fitzgreenlaw.com writes:
The post was migrated from Yahoo.
Robert:
The LAM motion has nothing to do with the dischargeability of either the first or the second. Trust deeds are not discharged, the debtors personal liability for their debts are discharged. Debts are discharged under 1328(b) unless they are covered by some exception in that section or in 523. There is no exceptions for secured debts. They are discharged, but debtors have to keep paying them because there is a lien on their property that does not disappear and would therefore allow the discharged secured creditor to foreclose if they stopped paying. The stripping of a 2nd under a LAM means that the note holder no longer has security for their debt, which is different from the discharge. Thus at the end of the 13 the debtors personal liability for the note which is secured by the 1st TD is discharged and she does not have any debt to be forgiven, whether or not the debt had been a recourse debt.
If you have any questions or concerns, please contact me.
Pat
Patrick T. Green, Esq.
Fitzgerald & Green
Attorneys at Law
1010 E. Union Street
Suite 206
Pasadena, CA 91106
Tel: 626-449-8433
Fax: 626-449-0565
pat@fitzgreenlaw.com
The post was migrated from Yahoo.
My Closing Statement.
I will now explain how non recourse loan creates COD (cancellation of
debt) income below. Fasten your seat belts for this one.
First a review of the facts.
The facts stated "Client is about 15 months away from completing a Chapter13 lien-strip (LAM) case. He may want to walk away from his house after
the ch 13 discharge.
It is likely that the house will still be upside down. Value was $150,000less than the 1st DOT balance when the case was filed." [boldness and
underlining added]
"Lets assume for the purposes of this question, the loan is a non-purchasemoney 1st DOT."
1. The facts stated it was "a non purchase money 1st TD".
a. That means it may not qualify for the Federal Exclusion for CODincome at all.
b. Non purchase money debt is recourse debt.
2. A 1st TD is not discharged with a LAM motion, which is the subject
matter of this case. It had to be a 2nd that was discharged because that is
what a LAM motion is for. The 1st rides through the C13 in tact. The 1st cannot be bifurcated into secured and unsecured on a personal residence andthe character of the first would not change into nonrecourse unless so
stated in the C13 plan, which is improbable.
I have clearly stated my reasoning. Now state, in detail, to all of us, how a recourse note secured by a 1st trust deed morphed into non-recoursedebt in a C13 LAM plan.
Good Luck starts with a strategy and a plan. Form a strategic alliance
with
Robert J. Suhajda, MS,CPA
17721 Norwalk Blvd. #43
Artesia, CA 90701
562-924-8922
Income Tax for Attorneys, Bankruptcy, IRS representation,
Fiduciary income tax returns, Estate and Gift tax returns,
Trust Protector, Independent Trustee, Court Accountings
1st was discharged, during the bk, with no income, and became nonrecourse. Plz explain how a nonrecourse loan can create discharge of indebtedness
income?
Dennis McGoldrick
350 S. Crenshaw Bl., #A207B
Torrance, CA 90503
On Feb 6, 2010, at 8:26 PM, _robert90701@robert9_
(mailto:robert90701@aol.com) wrote:
Ladies and Gentlemen of the Jury. Thank you for you time and attention.
You read the facts and don't the facts of the case say an unsecured 2nd
was stripped in the C13 and the
1st remains after the C13 discharge, which is entirely possible? Now if
the debtor abandons
the house after the C13 discharge what are the tax consequences? Because
it is still under water
and the debtor may be personally liable for the 1st, it is treated as a
disposition, thereby creating
a gain or loss.
Next question is whether there is COD income is realized due to the firstand there would be COD
income because the facts stated the Debt > FMV, which answers the questionpresented.
Next question is whether the COD income is recognized? If the house
meets the requirements
for qualified personal residence indebtedness up to $2M could be excludedfrom Fed income,
but not for California because it never did and no longer conforms to theFeds.
I rest my case.
Good Luck starts with a strategy and a plan. Form a strategic alliance
with
Robert J. Suhajda, MS,CPA
17721 Norwalk Blvd. #43
Artesia, CA 90701
562-924-8922
Income Tax for Attorneys, Bankruptcy, IRS representation,
Fiduciary income tax returns, Estate and Gift tax returns,
Trust Protector, Independent Trustee, Court Accountings
In a message dated 2/5/2010 11:45:29 P.M. Pacific Standard Time,
mjessee@jesseelaw.In a messag
I concur in the entirety with Dennis. If the debt is discharged in the
Chapter 13 or even if converted and discharged in a Chapter 7, the first
second, third, etc trust deeds are all discharged and there is no discharge of
indebtedness income regardless of whether a creditor later issues a 1099
for discharge of indebtedness income. As I recall there was a federal
statute enacted last year that set forth an additional exception to discharge of
indebtedness income that if this is an unpaid loan on a personal residenceit would not be subject to discharge of indebtedness income anyway
regardless of the bankruptcy discharge.
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
On Fri 5/02/10 11:20 PM , Dennis McGoldrick easky1@yahoo.On Fri 5/
The debt will be discharged at the end of the 13. Someone may say it
happens later, but debts are only discharged once. Read 26 USC 108.
Dennis McGoldrick
350 S. Crenshaw Bl., #A207B
Torrance, CA 90503
On Feb 5, 2010, at 8:36 AM, "Justin H" wrote:
Client is about 15 months away from completing a Chapter 13 lien-strip
(lam) case.
He may want to walk away from his house after the ch 13 discharge.
It is likely that the house will still be upside down. Value was $150,000less than the 1st DOT balance when the case was filed.
If the Debtor were to receive a 1099 debt forgiveness letter from the
lender, would he have to claim the debt forgiveness as taxable income?
Lets assume for the purposes of this question, the loan is a non-purchasemoney 1st DOT.
I guess it is also fair to ask whether there would be debt forgiveness liability had the client never filed bankruptcy to begin with.
The post was migrated from Yahoo.
1st was discharged, during the bk, with no income, and became nonrecourse. Plz explain how a nonrecourse loan can create discharge of indebtedness income?
Dennis McGoldrick
350 S. Crenshaw Bl., #A207B
Torrance, CA 90503
On Feb 6, 2010, at 8:26 PM, robert90701@aol.com wrote:
Ladies and Gentlemen of the Jury. Thank you for you time and attention.
You read the facts and don't the facts of the case say an unsecured 2nd was stripped in the C13 and the
1st remains after the C13 discharge, which is entirely possible? Now if the debtor abandons
the house after the C13 discharge what are the tax consequences? Because it is still under water
and the debtor may be personally liable for the 1st, it is treated as a disposition, thereby creating
a gain or loss.
Next question is whether there is COD income is realized due to the first and there would be COD
income because the facts stated the Debt > FMV, which answers the question presented.
Next question is whether the COD income is recognized? If the house meets the requirements
for qualified personal residence indebtedness up to $2M could be excluded from Fed income,
but not for California because it never did and no longer conforms to the Feds.
I rest my case.
Good Luck starts with a strategy and a plan. Form a strategic alliance with
Robert J. Suhajda, MS,CPA
17721 Norwalk Blvd. #43
Artesia, CA 90701
562-924-8922
Income Tax for Attorneys, Bankruptcy, IRS representation,
Fiduciary income tax returns, Estate and Gift tax returns,
Trust Protector, Independent Trustee, Court Accountings
In a message dated 2/5/2010 11:45:29 P.M. Pacific Standard Time, mjessee@jesseelaw.com writes:
I concur in the entirety with Dennis. If the debt is discharged in the Chapter 13 or even if converted and discharged in a Chapter 7, the first second, third, etc trust deeds are all discharged and there is no discharge of indebtedness income regardless of whether a creditor later issues a 1099 for discharge of indebtedness income. As I recall there was a federal statute enacted last year that set forth an additional exception to discharge of indebtedness income that if this is an unpaid loan on a personal residence it would not be subject to discharge of indebtedness income anyway regardless of the bankruptcy discharge.
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
On Fri 5/02/10 11:20 PM , Dennis McGoldrick easky1@yahoo.com sent:
The debt will be discharged at the end of the 13. Someone may say it happens later, but debts are only discharged once. Read 26 USC 108.
Dennis McGoldrick
350 S. Crenshaw Bl., #A207B
Torrance, CA 90503
On Feb 5, 2010, at 8:36 AM, "Justin H" wrote:
Client is about 15 months away from completing a Chapter 13 lien-strip (lam) case.
He may want to walk away from his house after the ch 13 discharge.
It is likely that the house will still be upside down. Value was $150,000 less than the 1st DOT balance when the case was filed.
If the Debtor were to receive a 1099 debt forgiveness letter from the lender, would he have to claim the debt forgiveness as taxable income?
Lets assume for the purposes of this question, the loan is a non-purchase money 1st DOT.
I guess it is also fair to ask whether there would be debt forgiveness liability had the client never filed bankruptcy to begin with.
1st was discharged, during the bk, with no income, and became nonrecourse. Plz explain how a nonrecourse loan can create discharge of indebtedness income?Dennis McGoldrick350 S. Crenshaw Bl., #A207BTorrance, CA 90503On Feb 6, 2010, at 8:26 PM, robert90701@aol.com wrote:
Ladies and Gentlemen of the Jury. Thank you for you time and
attention.
You read the facts and don't the facts of the case say an
unsecured 2nd was stripped in the C13 and the
1st remains after the C13 discharge, which is entirely possible? Now
if the debtor abandons
the house after the C13 discharge what are the tax consequences? Because it
is still under water
and the debtor may be personally liable for the 1st, it is treated as
a disposition, thereby creating
a gain or loss.
Next question is whether there is COD income is
realized due to the first and there would
be COD
income because the facts stated the Debt > FMV, which answers the
question presented.
Next question is whether the COD income is recognized?
If the house meets the requirements
for qualified personal residence indebtedness up to $2M could beexcluded from Fed income,
but not for California because it never did and no longer conforms to the
Feds.
I rest my case.
Good Luck starts with a strategy and a plan. Form a strategic alliance with
Robert J. Suhajda,
MS,CPA
17721 Norwalk Blvd.
#43
Artesia, CA 90701
562-924-8922
Income Tax for Attorneys, Bankruptcy, IRS representation,
Fiduciary income tax returns, Estate and Gift tax
returns,
Trust Protector, Independent Trustee, Court
Accountings
In a message dated 2/5/2010 11:45:29 P.M. Pacific Standard Time,
mjessee@jesseelaw.com writes:
I concur in the entirety with Dennis. If the debt is discharged in
the Chapter 13 or even if converted and discharged in a Chapter 7, the first
second, third, etc trust deeds are all discharged and there is no discharge of
indebtedness income regardless of whether a creditor later issues a 1099 for
discharge of indebtedness income. As I recall there was a federal
statute enacted last year that set forth an additional exception to discharge
of indebtedness income that if this is an unpaid loan on a personal residence
it would not be subject to discharge of indebtedness income anyway regardless
of the bankruptcy discharge.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 On Fri 5/02/10
11:20 PM , Dennis McGoldrick easky1@yahoo.com sent:
The debt will be discharged at the end of the 13. Someone may say
it happens later, but debts are only discharged once. Read 26
USC 108.
Dennis McGoldrick
350 S. Crenshaw Bl., #A207B
Torrance, CA 90503
On Feb 5, 2010, at 8:36 AM, "Justin H" <justinharelik@gmail.com>
wrote:
Client is about 15 months away from completing a Chapter 13 lien-strip
(lam) case. He may want to walk away from his house after the ch 13
discharge. It is likely that the house will still be upside down. Value was $150,000 less than the 1st DOT balance when the case was filed.
If the Debtor were to receive a 1099 debt forgiveness letter from
the lender, would he have to claim the debt forgiveness as taxable income?
Lets assume for the purposes of this question, the loan is a non-purchase money 1st DOT. I guess it is also fair to ask whether
there would be debt forgiveness liability had the client never filed bankruptcy to begin with.
The post was migrated from Yahoo.
Ladies and Gentlemen of the Jury. Thank you for you time and attention.
You read the facts and don't the facts of the case say an unsecured 2nd
was stripped in the C13 and the
1st remains after the C13 discharge, which is entirely possible? Now if
the debtor abandons
the house after the C13 discharge what are the tax consequences? Because it is still under water
and the debtor may be personally liable for the 1st, it is treated as a
disposition, thereby creating
a gain or loss.
Next question is whether there is COD income is realized due to the firstand there would be COD
income because the facts stated the Debt > FMV, which answers the questionpresented.
Next question is whether the COD income is recognized? If the house
meets the requirements
for qualified personal residence indebtedness up to $2M could be excludedfrom Fed income,
but not for California because it never did and no longer conforms to the Feds.
I rest my case.
Good Luck starts with a strategy and a plan. Form a strategic alliance
with
Robert J. Suhajda, MS,CPA
17721 Norwalk Blvd. #43
Artesia, CA 90701
562-924-8922
Income Tax for Attorneys, Bankruptcy, IRS representation,
Fiduciary income tax returns, Estate and Gift tax returns,
Trust Protector, Independent Trustee, Court Accountings
In a message dated 2/5/2010 11:45:29 P.M. Pacific Standard Time,
mjessee@jesseelaw.com writes:
I concur in the entirety with Dennis. If the debt is discharged in the
Chapter 13 or even if converted and discharged in a Chapter 7, the first second, third, etc trust deeds are all discharged and there is no discharge of
indebtedness income regardless of whether a creditor later issues a 1099 for
discharge of indebtedness income. As I recall there was a federal
statute enacted last year that set forth an additional exception to discharge of
indebtedness income that if this is an unpaid loan on a personal residence it would not be subject to discharge of indebtedness income anyway
regardless of the bankruptcy discharge.
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
On Fri 5/02/10 11:20 PM , Dennis McGoldrick easky1@yahoo.On Fri 5/
The debt will be discharged at the end of the 13. Someone may say it
happens later, but debts are only discharged once. Read 26 USC 108.
Dennis McGoldrick
350 S. Crenshaw Bl., #A207B
Torrance, CA 90503
On Feb 5, 2010, at 8:36 AM, "Justin H" wrote:
Client is about 15 months away from completing a Chapter 13 lien-strip
(lam) case.
He may want to walk away from his house after the ch 13 discharge.
It is likely that the house will still be upside down. Value was $150,000less than the 1st DOT balance when the case was filed.
If the Debtor were to receive a 1099 debt forgiveness letter from the
lender, would he have to claim the debt forgiveness as taxable income?
Lets assume for the purposes of this question, the loan is a non-purchasemoney 1st DOT.
I guess it is also fair to ask whether there would be debt forgiveness
liability had the client never filed bankruptcy to begin with.
Ladies and Gentlemen of the Jury. Thank you for you time and
attention.
You read the facts and don't the facts of the case say an
unsecured 2nd was stripped in the C13 and the
1st remains after the C13 discharge, which is entirely possible? Now
if the debtor abandons
the house after the C13 discharge what are the tax consequences? Because it
is still under water
and the debtor may be personally liable for the 1st, it is treated as
a disposition, thereby creating
a gain or loss.
Next question is whether there is COD income is
realized due to the first and there would
be COD
income because the facts stated the Debt > FMV, which answers the
question presented.
Next question is whether the COD income is recognized?
If the house meets the requirements
for qualified personal residence indebtedness up to $2M could beexcluded from Fed income,
but not for California because it never did and no longer conforms to the
Feds.
I rest my case.
Form a strategic alliance with
Robert J. Suhajda,
MS,CPA
17721 Norwalk Blvd.
#43
Artesia, CA 90701
562-924-8922
Income Tax for Attorneys, Bankruptcy, IRS representation,
Fiduciary income tax returns, Estate and Gift tax
returns,
Trust Protector, Independent Trustee, Court
Accountings
In a message dated 2/5/2010 11:45:29 P.M. Pacific Standard Time,
mjessee@jesseelaw.com writes:
I concur in the entirety with Dennis. If the debt is discharged in
the Chapter 13 or even if converted and discharged in a Chapter 7, the first
second, third, etc trust deeds are all discharged and there is no discharge of
indebtedness income regardless of whether a creditor later issues a 1099 for
discharge of indebtedness income. As I recall there was a federal
statute enacted last year that set forth an additional exception to discharge
of indebtedness income that if this is an unpaid loan on a personal residence
it would not be subject to discharge of indebtedness income anyway regardless
of the bankruptcy discharge.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 On Fri 5/02/10
11:20 PM , Dennis McGoldrick easky1@yahoo.com sent:
The debt will be discharged at the end of the 13. Someone may say
it happens later, but debts are only discharged once. Read 26
USC 108.
Dennis McGoldrick
350 S. Crenshaw Bl., #A207B
Torrance, CA 90503
On Feb 5, 2010, at 8:36 AM, "Justin H" <justinharelik@gmail.com>
wrote:
Client is about 15 months away from completing a Chapter 13 lien-strip
(lam) case. He may want to walk away from his house after the ch 13
discharge. It is likely that the house will still be upside down. Value was $150,000 less than the 1st DOT balance when the case was filed.
If the Debtor were to receive a 1099 debt forgiveness letter from
the lender, would he have to claim the debt forgiveness as taxable income?
Lets assume for the purposes of this question, the loan is a non-purchase money 1st DOT. I guess it is also fair to ask whether
there would be debt forgiveness liability had the client never filed bankruptcy to begin with.
The post was migrated from Yahoo.
I concur in the entirety with Dennis. If the debt is discharged in
the Chapter 13 or even if converted and discharged in a Chapter 7, the
first second, third, etc trust deeds are all discharged and there is
no discharge of indebtedness income regardless of whether a creditor
later issues a 1099 for discharge of indebtedness income. As I recall
there was a federal statute enacted last year that set forth an
additional exception to discharge of indebtedness income that if this
is an unpaid loan on a personal residence it would not be subject to
discharge of indebtedness income anyway regardless of the bankruptcy
discharge.
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
On Fri 5/02/10 11:20 PM , Dennis McGoldrick easky1@yahoo.com sent:
The debt will be discharged at the end of the 13. Someone may say
it happens later, but debts are only discharged once. Read 26 USC
108.
Dennis McGoldrick 350 S. Crenshaw Bl., #A207B Torrance, CA 90503
On Feb 5, 2010, at 8:36 AM, "Justin H" wrote:
Client is about 15 months away from completing a Chapter 13
lien-strip (lam) case.
He may want to walk away from his house after the ch 13 discharge.
It is likely that the house will still be upside down. Value was
$150,000 less than the 1st DOT balance when the case was filed.
If the Debtor were to receive a 1099 debt forgiveness letter from
the lender, would he have to claim the debt forgiveness as taxable
income?
Lets assume for the purposes of this question, the loan is a
non-purchase money 1st DOT.
I guess it is also fair to ask whether there would be debt
forgiveness liability had the client never filed bankruptcy to begin
with.
Links:
[1] mailto:justinharelik@gmail.com
[2] mailto:easky1@yahoo.com?subjectRe: [cdcbaa] 1099 after
completing Ch 13 LAM
[3] mailto:cdcbaa@yahoogroups.com?subjectRe: [cdcbaa] 1099 after
completing Ch 13 LAM
[4]
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The debt will be discharged at the end of the 13. Someone may say it happens later, but debts are only discharged once. Read 26 USC 108.
Dennis McGoldrick
350 S. Crenshaw Bl., #A207B
Torrance, CA 90503
On Feb 5, 2010, at 8:36 AM, "Justin H" wrote:
Client is about 15 months away from completing a Chapter 13 lien-strip (lam) case.
He may want to walk away from his house after the ch 13 discharge.
It is likely that the house will still be upside down. Value was $150,000 less than the 1st DOT balance when the case was filed.
If the Debtor were to receive a 1099 debt forgiveness letter from the lender, would he have to claim the debt forgiveness as taxable income?
Lets assume for the purposes of this question, the loan is a non-purchase money 1st DOT.
I guess it is also fair to ask whether there would be debt forgiveness liability had the client never filed bankruptcy to begin with.
The debt will be discharged at the end of the 13. Someone may say it happens later, but debts are only discharged once. Read 26 USC 108.Dennis McGoldrick350 S. Crenshaw Bl., #A207BTorrance, CA 90503On Feb 5, 2010, at 8:36 AM, "Justin H" <justinharelik@gmail.com> wrote:
Client is about 15 months away from completing a Chapter 13 lien-strip (lam) case.
He may want to walk away from his house after the ch 13 discharge.
It is likely that the house will still be upside down. Value was $150,000 less than the 1st DOT balance when the case was filed.
If the Debtor were to receive a 1099 debt forgiveness letter from the lender, would he have to claim the debt forgiveness as taxable income?
Lets assume for the purposes of this question, the loan is a non-purchase money 1st DOT.
I guess it is also fair to ask whether there would be debt forgiveness liability had the client never filed bankruptcy to begin with.
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