Client's Unreported 1099-C

[anu31402]

A client received a CP2000 letter from the IRS. It was a debt cancellation of $44k from a mobile home which was foreclosed and sold sometime in 2005. The morgage company had sold the mobile home for $17k and reported the $44k "charge off" on Form 1099-C in 2006 tax year. Now the IRS says she owe $13k as tax.

Additional information I gleaned from my client was that she had declared bankruptcy in January 2004 and left NC where the mobile home was. She wasn't aware of any Form 1099-C.

I filed this client's tax for 2006 and I need advice as to how to assist this client.

Thanks

Kay, EA

[JoshinNC]

Was the mobile home loan discharged

in the bk?

[joanmcq]

or was she insolvent if the loan was not discharged?