Form 1099-C

[Questionguy101]

Taxpayer and ex-wife bought a home together 10 years ago when they were married.

Five years ago, they divorced. But they still held the title of the property together 50-50 after the divorce.

3 years ago (2 years after they have divorced), taxpayer borrowed an equity loan from the home. The equity loan is under his name only). His ex-wife has nothing to do with this equity loan at all except her name was still on the home which was used as collateral for the loan.

Last year, the home was short sold. The equity loan was forgiven. A Form 1099-C is issued to the taxpayer.

Question: does the taxpayer report 100% of the cancellation of debt? Or he and his ex-wife have to each report 1/2 and 1/2?

[Questionguy101]

Anyone has an opinion?

[ddoshan]

It would seem that if the loan was in his name only he would be the one responsible for the 1099C. Could he get a home equity loan against the home without the other owner also signing on.

I really don't know, but if two folks own the home it would not seem quite right that one of them alone could take out a loan against without the other party also signing on.

[Questionguy101]

It would seem that if the loan was in his name only he would be the one responsible for the 1099C. Could he get a home equity loan against the home without the other owner also signing on.

I really don't know, but if two folks own the home it would not seem quite right that one of them alone could take out a loan against without the other party also signing on.

That's the question in my mind too. But the taxpayer confirmed that his ex-wife name is not on the loan and she did not sign anything when the loan was processed. In order to confirm further, I have told them to show me the closing statement of the equity loan. I will not be fully convinced until I am sure the name of the ex-wife is not on the closing statement.