1099-C

yeah,that's what i thought too.if you know someone versed in accounting i would ask them,but i thought that too.the year they settle the debt the had to claim the amount that year if greater than 600.00.

Oh it a good amount over $600. It looks like I better start cleaning out all the piggy banks in the house to pay my taxes

i just saw december 07.if it was close to the end of the month they might have counted it towards jan.which was 08 that really stinks.

I have to look up the date but I'm sure it was early Dec. Becaused we had made the agreement the end of Nov and I payed it a few days later.

Just fill out the form 982 and show you are insolvent. If you are not insolvent then start cleaning out the jars.

call the IRS and ask them point blank. You have nothing to lose, either they will tell you it had to be filed in the year it was done, or no, they don't have to file. At least you will know for sure and can plan accordingly.

This sounds like they didn't need the tax benefit in 07 so carried the balance thru to the next year. Nothing wrong with that from an accounting standpoint. You will need to claim the income form this on your 08 taxes. If you have already filed, you will need to file an amended return. PM Flyingifr, he is an enrolled IRS Agent and can tell you anything else you could possibly want to know.

Good answer BLL, not many people on any of these internet boards know about the exclusions!!!!

we knew about the exclusions.it was the question of why they chose to file it 1 year later.

The "settlement" difference is usually an accounting entry to account for that forgiven balance. It's possible they did not perform the account adjustment to your balance until FY2008, in which case they would report the loss on the 2008 P&L Statements and issue you a 1099 in 2008.

It appears to be just a timing issue, being so close to the end of the year at the time you paid. If you had paid/settled in Aug 07 and they were just now issuing the 1099 for 2008, then I'd say it's wrong. But when it's really just a few days difference between their accounting fiscal years, there doesn't appear anything wrong with their timing.

I would definately claim this income. I never received a 1099 for tax year 2007 and I just got a letter from the IRS saying I failed to claim the income. Now I owe 3,000 to the IRS. Well, the only positve thing about this is that I really needed the money last year. I am just going to pay the difference with my refund this year.

What would happen if you were insolvent in 07 but you're not now?