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tadams14 · 02-04-2009, 01:26 AM

Just trying to clarify before I commit to attempting debt settlement.

When determining insolvency, what does the IRS consider assets and liabilities?

I am assuming liabilities are minimum payments and monthly expenses?

enlightened · 02-04-2009, 02:10 AM

02-04-2009, 08:41 AM

Thanks for the reply.

But simply put, does everything in my house count as an asset.......if I were audited, would they consider the value of my furniture, golf clubs, kid's toys, etc? I know I am reaching, but I don't want to be suprised.

Or is an asset just limited to savings, checking, stocks, bonds, automobiles that are paid for, real estate owned, etc?

Some layman clarification would be much appreciated.

Flyingifr · 02-04-2009, 09:08 PM

How about some clarification from an IRS licensed Enrolled Agent? I deal with this all the time, and here are my instructions to my clients:

1. List all your assets at the time of the COD. The valuation is "quick sale value", or what you would get by putting them on your lawn with a "For Sale" sign on them
2. List all your debts, including the one that was discharged.
3. Subtract the two and compare the difference to the COD. If the difference is larger than the COD then you can use Section 108b to exclude from income the COD to the extent it is less than or equals the difference between assets and liabilities.

There is no set way of valuing your assets - so I use Quick Sale value. That is the method used in an IRS Offer in Compromise, and since COD is similar to an Offer in Compromise a similar valuation method is appropriate.

tadams14 · 02-04-2009, 10:30 PM

OK, but what I am trying to understand is "what is an asset"?

Using the yard sale example, do I put everything I own on my yard? Or is just specific types of items? And my question is what are those items?

Flyingifr · 02-04-2009, 10:32 PM

An asset is something (anything) that you own.

NASCAR_Devil · 02-06-2009, 08:49 AM

Glad to see you here Dr Tax.

04-09-2009, 07:11 PM

When previously owed taxes for prior years are included in the Chapter 7 Bankruptcy, is this debt eliminated by the discharge of the Chapter 7?

Chrys Henderson · 04-28-2009, 11:26 PM

Sometimes.

(Source: the IRS and "http://public.getlegal.com/legal-info-center/bankruptcy-faqs")

I would urge you to consult a tax attorney.

05-09-2009, 07:06 PM

i own my q-tips... do i list that? Ok. I am being sarcastic, but seriously.... I am in same boat as person above. Do I list my kids action figures, and the flower pot... my pampered chef chopper... Things I own is just too vague of a catagory. A detailed list of every item is overwhelming. I don't want to get carried away with listing too many unimportant things, but at same time I don't want to NOT list something only to have it bite me in the butt. I have searched the internet looking for any kind of answer to this... a list or a guideline, and it is driving me crazy that all everyone says is "assets are anything you own." I have a deadline, and soooo much other paperwork to fill out, that I really don't want to have to count my whole family of five's underwear and socks!
ok. i am done venting.

05-10-2009, 09:01 AM

I would just list all that stuff as "Personal effects, $500" and leave it at that.

Chrys Henderson · 05-10-2009, 09:09 PM

List collective items together (for example, tables, chairs, and beds, list as “furniture”), except for items worth more than $500, which must be listed separately.

You can list assets by groups of similar property, e.g. “furniture,” “clothing,” “personal effects,” etc. Provide the replacement value of each asset, which the price a store would charge for the property of that kind considering the age and condition of the property.

Pretty much as Guest said.

05-11-2009, 07:31 AM

I found on the IRS site a manual of procedures that is written for the irs revenue officers to follow. it explains what they can and can't do in actual english instead of all that legal confusing lingo that they use to purposely confuse us. It is actually written for the irs employee, and it gives a BUNCH of information that I have found helpful in what they are looking for as far as assets and also, and this is VERY IMPORTANT and hard to find - there is a standard amount of personal property that is EXEMPT from a levy!!! it varies for each year based on inflation, but it is somewhere around 6,250 from what I have been able to find. They won't tell you about this amount either. You have to find this out on your own. I have also used a tax program deduction pro.for donations to help me determine what my furniture and stuff is worth. it was very helpful. Also, if you are in trouble of a levy or seizure of assets, from what I understand, they have to have reason to believe that what they seize would actually be worth the time and storage and trouble to apply a signifigant enough amount to your liability.