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    1099-C question

    Client had a rental house and couldn't keep up with payments. He had a 1st and 2nd mortgage on it. A few years ago we discussed how to get out of his situation. Since it wasn't not his personal residence for quite some time, it had been a rental for a number of years. So he filed bankruptcy and listed the house in the bankruptcy. He got the 1095-A in 2013. In 2015 he received a 1099-C for the 2nd Mortgage and in box #6 it is a F which means "by agreement". So I told the client that he needed to contact Chase for a corrected 1099-C for code A for Bankruptcy. Chase told him NO, not changing it because they forgave the loan BEFORE the bankruptcy was discharged. He filed Chapter 13. In his bankruptcy papers is a Mortgage Proof of Claim Listing Chase as the Creditor and the balance owed.

    So now what?

    HEELLLLPPP Pleeease!!!

    #2
    Does the date in box 1 of the 1099-C show it was discharged before the bankruptcy discharge?

    If it happened before the bankruptcy discharge, there is a good change the taxpayer is insolvent, so that would be the easiest route to go.

    https://www.irs.gov/pub/irs-pdf/p4681.pdf#page=8


    Otherwise, the client may want to contact the bankruptcy attorney for clarification.

    Comment


      #3
      Not insolvent to the full extent....

      We looked an insolvency, however, They are only insolvent by $7600 and the 1099-C is for $62,000.

      Comment


        #4
        Originally posted by nwtaxlady View Post
        We looked an insolvency, however, They are only insolvent by $7600 and the 1099-C is for $62,000.
        Remember, the insolvency is figured by the date before the 1099C was issued. So, be sure you include the 62000.00 in the insolvency calculations.
        You have the right to remain silent. Anything you say will be misquoted, then used against you.

        Comment


          #5
          Yes it is in the

          Yes, the $62,000 is included in the total liabilities.

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