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    #1

    Bankruptcy Question

    I have a trucker who is in Chapter 13. The only asset he gave up so far is the truck, which is also his only depreciable asset.

    Basis of $0, FMV of $13,000, Loan balance of $14,800. The loan company has repossessed the truck and difference is shown as unsecured debt in the filing. What gain if any, does the trucker have in 2007?
    In other words, a democratic government is the only one in which those who vote for a tax can escape the obligation to pay it.
    Alexis de Tocqueville
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    #2
    Cancellation of Debt

    Cancelled debt is not taxable income if it is cancelled through a bankruptcy proceeding. You may need to use Form 982.

    The gain should be zero.

    Moreover, if the bankruptcy has not been discharged, then the debt has not really been cancelled yet.
    Burton M. Koss
    koss@usakoss.net

    ____________________________________
    The map is not the territory...
    and the instruction book is not the process.

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      #3
      Thanks Koss

      That's what my brain was telling me. I guess the fact that he brought in a stack of documents from the filing with a cover sheet that said. "Warning! Take these documents to the person who prepares your taxes" Made me think I was missing something and he might have gain on the repossesion.
      In other words, a democratic government is the only one in which those who vote for a tax can escape the obligation to pay it.
      Alexis de Tocqueville

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