Husband and wife owned a motorhome. Husband passed away in 2011. No payments were made on an outstanding loan in the amount of $101,000. In 2012, the bank repossessed the motorhome. The bank sold it for 21,000, turned around and sent a 1099 C to the wife for 80,000 for which she is not personally liable. Is this 1099 C treated as cancelled debt income or a nondeductible loss from a sale since it was nonrecourse debt?
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Marcus Weaver
Martin's Tax Returns
Ph: 215-723-6852
Fax: 215-723-7433 -
If property secured your debt and the creditor takes that property in full or partial satisfaction of your debt, you are treated as having sold that property for the amount of the canceled debt and may have a taxable gain or loss. The gain or loss on a deemed sale of your property is an issue separate from whether any cancellation of debt income associated with that same property is includable in gross income.Originally posted by mbdkweaver View Post
So it appears unless this is a business property that there is a nondeductible loss. Were there any other assets in the deceased taxpayers name that passed on to the wife?Taxes after all are the dues that we pay for the privileges of membership in an organized society. - FDR -
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I agree that it is a nondeductible loss. My question is whether or not I can ignore the 1099 C as income due to the fact that it is a non recourse debt.Marcus Weaver
Martin's Tax Returns
Ph: 215-723-6852
Fax: 215-723-7433Comment
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Who's SSN is on the 1099C? Did they both sign the loan? Was she responsible for the loan? What filing status is she using now? If 1099C is not in her name and her deceased has no currently open trust then I would send the 1099C back marked "deceased" as long as she had no responsibility for continuing the payments.Believe nothing you have not personally researched and verified.Comment
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