1099-C for deceased taxpayer

[oceanlovin'ea]

Client died in 2010. He had a time share financed at BOA in his name only.

Wife received a 1099-C for the balance owed on this loan. It reads:

xxxxxxx credit card with date cancelled and amount cancelled
Debt description - estate uncollected debt
borrower was personally liable for repayment of debt
deceased name's estate

It is in his social security number and the date is 12/31/11. When she called the bank about it, they basically gave her the run around and wouldn't give her any information and told her just to let it go. Not to worry about it.

[ChEAr$]

Client died in 2010. He had a time share financed at BOA in his name only.

Wife received a 1099-C for the balance owed on this loan. It reads:

xxxxxxx credit card with date cancelled and amount cancelled
Debt description - estate uncollected debt
borrower was personally liable for repayment of debt
deceased name's estate

It is in his social security number and the date is 12/31/11. When she called the bank about it, they basically gave her the run around and wouldn't give her any information and told her just to let it go. Not to worry about it.

Agree. If IRS ever sends a letter, executor/administrator must answer it of course.

[joanmcq]

The issue would be if assets in the estate were sufficient to cover the debt or if the estate was insolvent. It's an issue for whomever was the executor.

[oceanlovin'ea]

A trust had been set up for them. When he died, everything goes to wife. There was enough money to pay the balance, but the bank continually told her not to worry about it and that it was taken care of. I think someone also kind of mentioned they have insurance for that. They just basically told her to stop asking questions and forget it.

So I guess if there is ever a letter we will address the situation then.

Thanks.

Linda, EA

[Burke]

It was the bank's responsibility to notify the estate of the unpaid debt. They apparently did not take any such action, and have now written it off (i.e, the 1099-C). Since he died in 2010, and this is reported in 2011, the IRS has nothing to match it to. I don't think your client will hear anything from anyone about it. Except her conscience.