Can He Claim Insolvency?

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  • anu31402
    Senior Member
    • Aug 2006
    • 101
    #1

    Can He Claim Insolvency?

    I have a new client. He has two properties. One was his and wife's principal residence and the other was rental property. He separated from wife in 2009. The rental property had two mortgages. One of the mortages was cancelled and he got a 1099-C ($80k). When he divorced his wife, he moved to the basement of the rental property while the ex-wife lives with children in principal home.

    Please, which relieve does he have with the 1099-C income?

    Your advice is greatly appreciated.

    Kay, EA
    Tags: None
    • Gretel
      Senior Member
      • Jun 2005
      • 4008
      #2
      It appears that insolvency is the only one available for the rental property. You have to look at the moment just before the mortgage was forgiven, add up all assets (including retirement) and deduct all liabilities.

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        • anu31402
          Senior Member
          • Aug 2006
          • 101
          #3
          Thanks Gretel

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