1099-c school

[bekzm]

22 year old graduated from school with student loans. They consoldiated the Mohela loans and the $2096 was one of the smallest out of $10,000. She receives a 1099-C from Mohela for the amount in box 2 of $2096. and $5 in box 3 in interest. Box 5 is marked yes as personally liable for repayment of the debt. There is no date in box 1 but guess my question is - does it go on line 21 as taxable? Can she file the form the 982 to say she was insolvent due to no job.

Any suggestion.
Thanks

[Gary2]

You can't just say she was insolvent due to not having a job. Otherwise former presidents Bush and Clinton would be insolvent :-) Many people with jobs are insolvent, many without jobs or other income aren't.

You should at least look at the insolvency worksheet in Pub. 4681. Unless it's obvious, you must go to the trouble of filling it out or having the client fill it out. If, for example, her only debt was the $10K total in loans, but she owned a car - perhaps a graduation present - with a FMV of $12K as of the date on the 1099-C, then she's not insolvent.

She probably doesn't have retirement assets to worry about, but car, clothing, furniture, jewelry all count. In this situation, I wouldn't be at all surprised if it turns out that she's insolvent, but I certainly wouldn't assume it.

[bekzm]

Thank you

Thank you for your input. You been helpful.