Insolvency
Date: Thu, 06/10/2010 - 15:17
1. I am married and the debt settled was all mine. Do I put assets and liabilities for just myself, or since we have joint savings and own a home together, is her assets liabilities included in the total?
2. Is the date of agreement the date I should use to show asset/liabilities or is it the date that the money was taken out of my account? I agreed to some CC's on May 31, but money wasn't taken out until June 1 and 3. All other settlements took a few days from the date of agreement.
3. Do you use monthly bills...electric, gas, cable...etc in liabilities?
Some sites I look at say it is very easy to do this while others say it is difficult. So, I am just asking these questions to possibly get some resolution.
Anyone do this process before?
Thanks!
I've done it for clients, and in tax classes and it's hard. If
I've done it for clients, and in tax classes and it's hard. If you're insolvent on the day before the settlement agreement is finalized then you don't have to declare the difference between the settlement amount and the actual debt as income. My advice is to talk to someone who specializes (not necessarily a CPA or a tax lawyer) in doing taxes like HR Block. You don't have to go to Block, it's just an example, cause I know they give the kind of advice you need. It'll cost you, but if you get a professional to help you, you'll decrease your risk of being audited.
I can tell you that the IRS tags certain returns every year to examine closely, and because of the recent economic crisis, they're pulling returns with insolvencies. Scary, but then who's not afraid of the IRS?
i have read it is best to do your assets/balances/liabilities sh
i have read it is best to do your assets/balances/liabilities sheet BEFORE you get even one settlement. then i would do one AFTER each settlement as to keep it updated, but keep all of the sheets you do just in case.. i have wondered about being audited on this matter myself.. my concern is, when they audit you, do they only do it for the current year, or do they do prior years as well? i imagine the returns that the IRS are more likely to pull are the ones showing larger amounts of "forgiven" debt... i guess that is one advantage of bk 7 or 13, you dont have to worry about it.... it is in fact scary.. irs can mess you up worse than anyone i believe..