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Chapter 7 Bankruptcy

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    see if this helps:

    Last edited by TAXNJ; 03-12-2023, 07:32 PM.

    Leave a comment:

  • KWF
    started a topic Chapter 7 Bankruptcy

    Chapter 7 Bankruptcy

    Anyone care to take a crack at this one

    I had a client recently inform me that he filed Chapter 7 bankruptcy in 2022. This is my first time dealing with this issue.

    If I understand correctly, in chapter 7, a separate bankruptcy estate is set up to accomplish all required bankruptcy procedures.

    So, are my following assumptions correct:

    The bankruptcy estate has little effect to the preparation of taxpayer's personal 1040 tax return, other than possible 982 reduction of tax attributes?

    No bankruptcy discharge of debt will be shown on personal 1040?

    In a separate question:

    Taxpayer has little in the way of assets other than a Roth IRA

    Are retirement accounts exempt from 982 reduction of tax attributes?

    Or will Roth IRA basis be subject to basis reduction within the bankruptcy estate because of cancelled debt in bankruptcy?

    Thanks for any help