1099c

[S T]

Just received from the t/p a 1099 C that has the bankruptcy box 6 checked.

Box 2 is 4,926 amount of debt canceled, nothing checked in box 5 Yes or No

Advanta Bank Corp so it appears to be a Credit Card

My software tells me not taxable if the BK box 5 is checked, and is completing the form 982.

I am thinking I only need to verify with the T/p and obtain the proof that it was discharged in the BK.

Thoughts,

Thanks,
Sandy

[JG EA]

Agree with all especially checking with the client. I had one client that said definitely not in bankruptcy but the box was checked.

[oceanlovin'ea]

same situation

box is that tp is not liable but it is just a credit card debt that was cancelled.

They are supposed to be getting info together for me to prove insolvency.

Linda EA

[Jesse]

I have several taxpayers that have received 1099-C for debt cancelled many years past, some bankruptcy, some not. One taxpayer said they called the company which told them that the 1099C had to be issued in order for the company to "get it off their books" as they have been carrying it on their books as a receivable all of these years.

Is this an error on the part of these companies, or because they finally conceded they won't be receiving these funds this becomes a reportable transaction to the taxpayer?

It should have been "a write off" for the company the day the discharge notice came through in bankruptcy, yes? If not a bankruptcy how long - possibly statutory limits per state? Or until the company decides to take it off the receivables?

For the taxpayers that did not file bankruptcy would they need to look at the insolvency exclusion as of 2010 - when the debt is officially cancelled although the cancellation in their mind is when they quit receiving calls and bills - in one case back in 2005?