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Form 1099-C Reported Two SSN

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    #1

    Form 1099-C Reported Two SSN

    Father and son both are my clients. Father received a IRS Notice to change his tax return because of Form 1099-C. After discussing I found out it was from a Student Loan the Father had co-sign with the Son. Private Lending Inst. and there was a agreement to pay them so much and about $17,000 was forgiven. The Lender sent a 1099-C to the Father and Son separately for the same amount $17,000 and it is reported on each SSN. So the Father has $17,000 and Son has $17,000. Son reported it last year and paid the tax. Not sure why Father did not give me the 1099-C but I did not get it.

    I did some research and only thing I have found so far is when the tax returns were originally filed and the 1099-C was only in one SSN.

    So I am looking at writing a letter stating the Son has already reported this on his tax return with his name, address, and SSN.
    Really if Father was co-signer I assume the $17,000 should have been divided in half and each report it. Since the Lender did not prepare the 1099-C correctly giving the IRS the Son's info is the only way I can see to possibly correct it.

    I know everyone is busy and I appreciate any input.
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    #2
    One would think that the son would be happy to provide a copy of his tax return and sign a POA (if necessary) to help get his Dad out of a jam. Let's just call it appreciation for Dad having guaranteed the loan in the first place. If Son refuses to cooperate, then he's probably lying about having reported the income and/or paid the tax. Of course, if Son claimed insolvency, then Dad still has a problem even with the Son's tax return in hand.
    "The only function of economic forecasting is to make astrology look respectful" - John Kenneth Galbraith

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      #3
      I prepare both of their tax returns. Son did report on his tax return and is willing to help out in anyway.
      I suppose start with the letter and go from there. I would have them ask the Lender to correct but they have made mistakes on other 1099 forms and refused to correct those.

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        #4
        Originally posted by geekgirldany View Post
        I prepare both of their tax returns. Son did report on his tax return and is willing to help out in anyway.
        I suppose start with the letter and go from there. I would have them ask the Lender to correct but they have made mistakes on other 1099 forms and refused to correct those.
        Please post what you find out regarding this. I just had one today w/ grandma getting a 1099C for a loan she co-signed for grandson. It would be nice to find out that she may have only had to claim 1/2 of it.

        Comment

          #5
          Kathy sending you a PM. Not sure if TTB wants outside links posted.

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            #6
            Originally posted by geekgirldany View Post
            I prepare both of their tax returns. Son did report on his tax return and is willing to help out in anyway.
            I suppose start with the letter and go from there. I would have them ask the Lender to correct but they have made mistakes on other 1099 forms and refused to correct those.
            Well, in that case you're way ahead of the game.
            Having all the facts at your disposal prevents spinning your wheels.
            Seems to me this is a slam dunk once you get IRS to understand.
            (As if anything's a slam dunk with IRS...)
            "The only function of economic forecasting is to make astrology look respectful" - John Kenneth Galbraith

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              #7
              I have exactly the same situation: Mom co-signed and the lender issued a 1099-C to both her and to her son. I filled out form 8275 with this as an explanation:

              "PURSUANT TO TREASURY REGULATION SEC. 1.6050P-1(7) THE 1099-C ISSUED MISTAKENLY TO HER BY THE BANK IS EXCLUDED AS SHE WAS A COSIGNER ON THIS STUDENT LOAN FOR HER SON.
              THE INCOME WILL BE REPORTED BY HER SON ON HIS 2017 TAX RETURN.
              JOHN DOE SSN XXX-XX-XXXX"

              Co-signing a loan means the lender is legally allowed to pursue payment from the co-signer, but they are incorrect to issue a 1099-C to anyone except the borrower.

              Comment

                #8
                Make that Treas Reg 1.6050P-1(d)(7). https://www.law.cornell.edu/cfr/text/26/1.6050P-1

                Comment

                  #9
                  Thank you all for responding.

                  Beth, thank you for posting the reg. sec. this will greatly help me with the response to the IRS.

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