Cancellation of debt - 1 year later

[cltmoto]

Hi all - I've been absent from the boards since my "Final Decree/Case Closed" in August of 2009. On Saturday of this year (Jan 2011) I received a 1099-C from BOA for a credit card that was discharged in the Ch 7 bankruptcy. I'm confused on this - does it apply to my 2010 taxes? They have the "Date Canceled" as 9/3/2010, a full year after my case was closed by the courts.

If I put this information into turbo tax for 2010 taxes, I get a huge hit (it was $16,000 on the card). It seems to me that form 982 should have been filled out for my 2009 taxes. Also, if I'm reading what I'm finding correctly, I don't owe taxes on this because at the time of my discharge, I was insolvent.

Is this a BOA mistake (the date), or do I have to pay taxes on this a year and half after I was done with the BK?

Any help is greatly appreciated. I had forgotten what a great resource this forum was!

Tom

[dp1969]

We were discharged April 2007 and both a mortgage and a mortgage line of credit were included in the BK. We surrendered both to BK and today we got a 1099-C from the 2nd loan stating the amount of canceled debt and the date canceled was 12/28/10! WTF? We are not paying taxes on this, right? The box 6 of the form is not checked. But all my court paperwork says different! The 2nd loan was sold to another company and it seems they didn't get the message. Now it seems I have to pay a visit to my lawyer and tax guy.

[Passive]

I too received a 1099-C from BOA today for a credit card that I had used in an ATM to withdraw cash to pay another credit card. This was on a business card that I was personally liable for which was outlined in the bk documents, but neither chec box 5 or 6 is checked.

My discharge from chp7 was 02/2010. I wasn't expecting a 1099 of any sort and filed with refund already in my bank account.
Obviously I will have to file an amendment, but do I really have to pay taxes on this??

[mike22]

I will be interested to see what everyone else says being that I am new to alll of this as well but I think from that you are all ok and will not have to pay taxes on the items included in the BK. I think all that happens is you fill out a form and include it with your filing. We will all wait for a veteran to give us the nod that this is correct.

[Pandora]

good lord - now ya'll have me worried that we'll get a 1099-C for our 2nd mortgage that's being stripped. I certainly hope that's not how it works! Keeping an eye on this thread to see what answers come up.


Here's the IRS pub on 1099-C and Bankruptcy http://www.irs.gov/pub/irs-pdf/p908.pdf

still reading to try to find out about how a 2nd mortgage thats being stripped will work...

[keepmine]

This has been addressed in multiple threads.
You have no tax liability on debts discharged in bk. You'll need to file IRS form 982 to deal with the 1099C.

[discouraged]

Thanks keepmine - I think we sometimes forget, and it's good to hear it again. I copied your post and put it into my bankruptcy file notes so if I ever get one I'll know what to do.

Thanks again.

[cltmoto]

It was all panic

Everyone - here's a little follow up to my original post. First off, I apologize for posting this question - now that I'm more educated on it, I see it's been addressed many times. My problem was this (and perhaps this part will help somebody) - I was using the online version of Turbo Tax. This version does NOT support form 982 - it doesn't even mention it. After doing some digging, I found out you must have the desktop/cd version of TT in order to access the form. I picked up a copy, went through my taxes again, found the magic form and BAM - no tax liability for me.

Again - thanks to all who have responded - sometimes we just panic. As if the BK thing wasn't trying enough, to have it come back up two years later just sent me into a tailspin.

To all of those that are still going through the process - I can tell you that two years later, my family and I are much better off than we were then - you can do it - just hang in there!

Tom

[winterheart]

Thanks for bringing it back up though! We are just going through our BK right now, so now at least I now will be aware of what to do when and if the issue arrises thanks!!

[tcreegan]

Hi all,

To shed light on the seemingly bizarre timing of the 1099-Cs....many companies strategically write off debts for tax advantages or to slant the quarterly earnings report.

But not saying they aren't simply incompetent either!

Tom in Colo