slavenomore

"We will no longer attempt to collect the unpaid debt on your account", - You will get 1099-c from us in the near future.

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@ArtVandelay .. you're right...debts > assets = insolvency.  Problem is...Assets includes EVERYTHING you own including 401k, cash value of life insurance, your bobble-head collection...and there are no exceptions.

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@willingtocope Luckily the bobble-head and beanie baby markets are still in a slump :waah:  Fortunately or unfortunately most of us here don't have to worry about the rest. I have helped friends with this in the past and none of them have ever been audited. For people with incomes between 25K and 100K the odds of being audited are less than 1%. Of course you never know when you might be one of the "lucky" ones.

 

 http://www.nolo.com/legal-encyclopedia/what-are-the-odds-being-audited.html

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I just rec'd a 1099c with code G.  If this is actually cancelled debt, will the CR show a 0 balance?  I intend to go insolvent, but considering how muddy the water is, I am assuming a 0 balance....

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How can we declare INSOLVENT? 

You need to use the worksheet in Publication 4681 and save the form.  You will  need a balance sheet showing your assets and liabilities (you need to have a negative net worth to be qualified) for the year in question.  You file a form 982 to offset the 1099C claim on other income on your 1040 Line 21  (Debt Cancellation).  The IRS then matches their copy of the 1099C and your return to decide to offset the income and adjust either your refund or tax liability.  Save the worksheet and a copy of the balance sheet, because the IRS will probably ask for proof and the balance sheet/4681 worksheet should suffice.  It may bring other questions and proofs that you will need but it is a relatively simple process.  You attach your 982 to the 1040, you don't need the 1099C attached.  YOU NEED A 982 FOR EACH 1099C

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I need to add in my case being retired with a pension and SS I don't qualify for insolvency.  My pension and SS are protected from seizure but the 'interest in pension' has to be included in my asset column.   The amount for 'interest in pension'  line 29 of the 4681 worksheet is the amount I entered on line 16a on my 1040.  Using the worksheet I arrived at a positive net worth.  Therefore I am obligated for the tax on the 1099C on both Federal and state.  Total F&S I'm still below the amount of interest and fees charged by the creditor.  The tax amounts to about 15% of the reported amount of the 1099C. 

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I need to add in my case being retired with a pension and SS I don't qualify for insolvency.  My pension and SS are protected from seizure but the 'interest in pension' has to be included in my asset column.   The amount for 'interest in pension'  line 29 of the 4681 worksheet is the amount I entered on line 16a on my 1040.  Using the worksheet I arrived at a positive net worth.  Therefore I am obligated for the tax on the 1099C on both Federal and state.  Total F&S I'm still below the amount of interest and fees charged by the creditor.  The tax amounts to about 15% of the reported amount of the 1099C. 

 

If this is for a sizable amount of money pay someone to calculate this for you. Shelling out a little to an H&R Block type service might save you a few hundred or thousand in taxes. 

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If this is for a sizable amount of money pay someone to calculate this for you. Shelling out a little to an H&R Block type service might save you a few hundred or thousand in taxes. 

 

Very true, I normally use TurboTax but was waiting out anymore 1099C's before buying.  Most hearsay from tax experts (CPA's) and the IRS tax examiners scoff at preparer's like H&R and commercial tax software as lame and error ridden, truth is no one's opinion is worth their salt on taxes, even going to the IRS for a sit down will result in total confusion.  It just depends upon the examiners mood, how much sleep they got and their interpretation. 

 

I have re-thought my 'interest in pension' issue and decided to follow up with a 982 for exemption because I can't find any clear explanation about how the 'interest on pension' amount is determined.  It's the only grey area on my return.  The tax (both Fed and State) amounts to less than $250 (already with held) for the 1099C in question if dis-allowed I get what is on my refund line.  

 

Thanks for the suggestion.

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As for the pension issue all I could find is that every "professional" seems to have a different opinion. My opinion means nothing, especially to the IRS, but I think of this this way.

 

If you have an IRA or 401K and you die then whatever is left in those accounts is an asset in your estate.

 

Whatever you have in your SS account is just gone. Its not really an asset unless the payments continue to underage children and/or a spouse. If your single that money is lost forever, so it is definitely not an asset. 

 

I would think most pensions would be closer to SS than a private retirement account. Once again this might remain an asset only if you have qualified dependents. If you are single then the pension goes away just like SS in most cases. 

 

That information is worthless for tax purposes, but it is definitely worth challenging if audited. According to the IRS you have less than a 1% chance of getting audited if you make between 25K-100K. You can take a chance doing it on your own or find a tax professional that thinks the same way. I guess the big question is the risk/reward based on the amount of $$$$. 

 

 

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Hey all, 

 

Finally GOT MY 1099's !

got 3 of them from the same bank.

they all say:

1) date of identifiable event 4/2013
2) amount of debt discharged 30k for 3
3) interest 0
4) credit card
5) was borrower personally liable for repayment of debt? YES
6) Identifiable event code. G
7) fair market value of property 0

Questions: 

a) What does 5 mean? 

B) if in understand this correctly code G means the debts are truly cancelled and will not be resold, correct? Thx. ; ) 

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"5" means YOU PERSONALY had the found income.

 

And, no, Code G does not mean the debt goes away.  It means "decision or Policy to discontinue collection".  They may stop, for the moment, but they can sell it...and maybe even decide to start up again.

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If the 1099c was for 2013 and you qualify for insolvency in 2013 when you file your 2013 income tax return...you will not have to pay taxes on the "found income".

 

But...the debt itself is still collectable. 

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@slavenomore

 

 I received one last week with code H.  I'll trade you my H for your G if you want :-D. At least code G states something that is can be translated into something. Code H just says "Expiration of nonpayment testing period". That is about as vague at it gets. 

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@ArtVandelay  ... my guess would be that means that you haven't paid on it, and they haven't dunned you for it in 36 months...one of the IRS triggers.

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@ArtVandelay  ... my guess would be that means that you haven't paid on it, and they haven't dunned you for it in 36 months...one of the IRS triggers.

 

That is what I can't figure out. The DOLP is 5 years, which is one year away from the SOL. The last letters were sent within the last two years, so its not the 36 month period. I can only hope they just gave up, but it might just have something to do with their internal accounting. 

 

Its a tricky situation for me. I can declare insolvency and it will have no effect on me financially. On the other hand I can declare it as income and pay a small amount of tax on it. If I pay taxes on it and they sue then I will have an argument in court. Either way I will be sweating for the next few months. 

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I wish you luck ; )    I understand the sweating….

 

I really don't understand how

 

1) we can get a 1099 with a code like G or H on it.

 

2) we file insolvency for the full amount. 

 

3) How could it possibly still be collectable? 

 

4) oc CC got the charge off,  you declared insolvency.  Seriously, how could it still be collectable?    

 

I mean does that mean you should you declare Bk instead of insolvency, because you will never no if it will be collectable

some day or ever really go away ?    I don't get it. 

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Yes...BK is the only means to truly make a debt go away.

 

Think of it this way...OJ was found not guilty in criminal court, but then was found liable for two deaths in civil court (and then, went to jail for something entirely different).

 

The point is...IRS rules (i.e., when a 1099c must be issued) apply in tax court...not in civil court. 

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I wish you luck ; )    I understand the sweating….

 

I really don't understand how

 

1) we can get a 1099 with a code like G or H on it.

 

2) we file insolvency for the full amount. 

 

3) How could it possibly still be collectable? 

 

4) oc CC got the charge off,  you declared insolvency.  Seriously, how could it still be collectable?    

 

I mean does that mean you should you declare Bk instead of insolvency, because you will never no if it will be collectable

some day or ever really go away ?    I don't get it. 

 

I'm just waiting it out for now. Unless something terrible happens this one clears the SOL next year. I have fought way to many fights to declare BK. I hope that I never have to, but if I do it will be in case of emergency. I have a couple of months to make a decision on the tax issue.    

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First of all I want to thank all of you for such great info, your generous time and wise council.    

 

I always say when it comes to medical, legal or financial the person with the best info wins! 

 

NOW THAT I HAVE RECEIVED MY 1099 -C (code G) for all 3 chase accounts, I have decided to declare INSOLVENCY instead of BK.

 

( no house, old car, few assets) 

 

What are the step by step ways for me to do this?

 

1) DOWN LOAD IRS PUBLICATIONS -  # 4681, # 982,  #1040 ( not 1040 a,)

 

2) Worksheet of assets and liabilities  (ANYONE HAVE AN EXAMPLE?)

 

3) FILL IT ALL OUT AND TAKE TO TAX ACCOUTANT.  

 

QUESTIONS:

 

1) how does that affect my state taxes. ?
 
2) how does insolvency affect current payment plan with the IRS ?
and new taxes due? will it put me in a better position to renegotiate another payment plan?
 
3) how does this affect obama care monthly subsidy if you declare insolvency?
 
4) how does insolvency position me in a better place for negotiation of the remaining 

   debt of the remaining -16K  from another oc suing me? 

 

5) What is the exact date that I must use for insolvency if the 1099C are for 2013?

    and how do you find out what the exact figures were for that date? 

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Thank you so much, 

 

one more questions:

 

1) Can I still file a tax extension and have until october to declare insolvency and my 1099-C;s,  without it hurting my insolvency filing in any way? 

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