What is considered other income on bankruptcy form?

[Memphisbelle]

My mom is using her money to build herself a small house on my property for when she retires in the next fews years. This year $20,000 of her money was deposited in my bank account to pay for the architect, survey and to some materials early when we saw a good deal etc. The place is not built yet so there is no value added to my land and all the money was spent as can be verified in my bank account on the above mentioned activities. Amazing what is spent before you break ground!

She lives out of state so instead of her sending me checks piece mail she just sent me 2 10,000 checks a few weeks apart and I put them in my account. I am handling all the details given she is 3000 miles away. We didn't feel it would be an issue, tax wise, since she paid the taxes already and if anyone ever questioned my bank account, at the VERY worst but WRONG assumption, it would be considered a gift and there is no tax liability for me and I am not claiming it on my taxes.

BUT, now that I have to file bankruptcy related to lost income AND I have those two deposits in my bank account do I have to claim that as "other income in the last two years". They were deposited more than 6 months before the day I file bankruptcy, but within this year. It just doesn't seem right to have to claim this as income in any possible way. There isn't any value realized yet to my property or me at all because she isn't paying me to do this for her.

And, finally, I don't want my mom to know I am filing. So, do I have to put it down this money under "other income in last two years? And, if I have to, do I have to get a letter or something from my mom? And, does it even matter at all that I had this money deposited in my account 7 months before I applied for what ever reason anyway?

I am seeing a lawyer next week but this is keeping me awake.

LOL, how I would have not done this if I knew where I was going to be today. What was harmless when it occurred could come back to bite me now cause revealing to mom that I am bankrupt is the last thing I want to do.

Thanks

[tobee43]

yes, this situation will indeed most likely raise an eyebrow or two....however, if you can explain it and back it up with proper documents you should be fine...

just a suggestion for next time....have your mom send amounts less than 10k....as when 10k is "passed" through anyone acct the irs is notified...just for food for thought...always make amounts of money transfers less than 10k...it's NOT dishonest, it's just being prepared so you do not have to explain the amounts...additionally, if those amounts are not listed on your past 6 months bank statements they will not be seen...once again, not in an attempt to be dishonest, but you may want to wait out, if you can, the time period where those amounts do not show up so they do not have to have this long explanation attached.

it's not against the law to have you mom want to live on your land...so really i don't think you have much to worry about....provided everything was documented correctly.

[Memphisbelle]

Thanks for the reply. I am waiting to declare when it is six months past that money going into my account so it won't even be a question on the means test. And, I am going to get a letter from my mom, to whom it may concern letter, and pictures of the deposited checks for the IRS if I need them later to prove it was, at worst, a "GIFT" from mom and so the Trustee can see it where it came from if it comes to that. However, it will be interesting to see what the second check looks like. It took almost two weeks for my bank to clear the first check so we decided to just get a cashiers check so I could access the funds sooner. That check better have her name on it! Don't want to have to work with her bank to prove anything to anybody. Again, wasn't doing anything WRONG so didn't think about at that time.

That covers how the money got there. As far as how it was spent, I can get pictures of the checks I wrote for the survey, the architect, etc. to prove what I spent on the building plans. However, I spent a lot of cash too buying things on craiglslists etc. and paying to clear the land. Everybody likes cash. Who knew anyone would ever care how I spent this. So, for simplicity sake, I think I will just claim whatever that I can't prove I spent on the project, as a cash GIFT. A $10,000 gift from mom in the "other income in 2yrs" section shouldn't raise an eyebrow because I am truly broke. I come out -$200 on the 6 mnth means test without even counting what I pay on debt. Thankfully, my tax returns prove I am covering my true spending and barely scraping by so it doesn't look like I am hiding income either. So, even a $10,000 GIFT won't look extravagant. Crazy.... not telling the full truth so I don't have to prove the truth.

Whew, just writing this makes me feel uneasy. How insane is this. This is going to be so much more of an emotional ride than just getting to this place in my life. I am glad this site exists. I am so much better prepared to take full advantage of my free consultations with lawyers next week.

I really wonder what other people put in that "other income in 2yrs" and what kind of questions/challenges they get. So, chime in if you are so inclined to share.

[tcreegan]

Hang in there MemphisBelle,

I think your Mom's money should be 'property held for others' and not used on your schedules. Sounds like you can document everything, that is a good thing!
Good question to ask an attorney.

Another thought I had was putting Mom's money in a separate account.

Good move on using the consultations, folks around here recommend shopping around; ask about communication: email/phone/face-to-face, secretary/paralegal/attorney, response time; ask about work ethic/organization: dot all the i's and cross all the t's or 'good enough, file documents ASAP or 'gets there before the deadline'; ask about what exactly is included in the retainer/fee: court filing fees, adversary proceedings, amending schedules, and ask about experience: file many BK cases? Know the judges? trustee?

Good luck w/ your filing, you are in good company here, lots of good folks to help you out !!

Tom in Colo