Insolvency?????
Date: Sun, 09/12/2010 - 06:02
Basically, it is like anything else with the irs. Document. So
Basically, it is like anything else with the irs. Document. So you add up your assets and appraise high value items. House value can be supported by zillow or comps. Car value by market sales. Then subtract liabilties. They are much easier to figure.
Yes, if you are looking at insolvency in terms of hoping you wil
Yes, if you are looking at insolvency in terms of hoping you will not be liable for taxes on a forgiven debt, be sure to document it at the time of settlement, so that you can supply the documentation if needed.
Quote:Originally Posted by cookycriscan someone give me info abo
Quote:
Originally Posted by cookycris can someone give me info about insolvency????mostly, how do you prove it? |
ZipDebt.com has a great blog on it. I went on IRS.gov and reviewed what they had on this. It seems pretty easy. If you have negative net worth then if it is higher (the amount you are in the red) than the 1099c they send to you then you are not going to pay and you file the form on IRS.Gov. BUT even if you are in the negative at all...say it is not as much as what you got forgiven, you can deduct that from the 1099C...say you got forgiven $25K and you had a negative net worth of only 10K, it would offset and you pay taxes on only $15K. Hope that helps.
Cooky How did you fare with FIA/BOA..I saw someone say that you got a good deal. Care to share?
i got 40% with fia. my bal was 8659.71 at 120 days late. i paid
i got 40% with fia. my bal was 8659.71 at 120 days late. i paid 3500.
what kind of info do you have to have on hand to prove this inso
what kind of info do you have to have on hand to prove this insolvency come tax time? should i have it in print? if i go to a site like zillow.com and print out the page that shows what my house is worth now will that serfice for home value at tax time?
can you give me the link for zipdebt.com i went there and couldn
can you give me the link for zipdebt.com i went there and couldn't find anything on insolvency?
You use the value of your assets and liabilities on the day afte
You use the value of your assets and liabilities on the day after your settlement is complete. I have used zillow but also had a bpo that wf got in conjunction with my mod. You also need to consider any work your home needs to be in selling condition.
Quote:Originally Posted by cookycriscan you give me the link for
Quote:
Originally Posted by cookycris can you give me the link for zipdebt.com i went there and couldn't find anything on insolvency? |
It is in the BLOG area of ZIPDEBT. It is called Debt Settlement, Insolvency, & Income Taxes as the title. It is from Nov 27, 2009. Hope that helps. If not let me know and I will look for it again and get the URL and PM you.
Quote:Originally Posted by AnonymousIt is in the BLOG area of ZI
Quote:
Originally Posted by Anonymous It is in the BLOG area of ZIPDEBT. It is called Debt Settlement, Insolvency, & Income Taxes as the title. It is from Nov 27, 2009. Hope that helps. If not let me know and I will look for it again and get the URL and PM you. |
This zipdebt is a commercial site and this forum does not allow promotion of any such. But I will say that the blog is good stuff. But it misstates a very important aspect of insolvency: That is, the insolvency must be immediately preceeding the cancellation of the debt according to IRS pub 4681. So, it is NOT at the end of the year as that blog indicates. It is EACH debt that is forgiven and is calculated IMMEDIATELY BEFORE the debt is cancelled. The IRS pub also indicates each cancelled debt needs to be calculated for insolvency "immediately before" each debt cancellation. So I have 12 of these to do...not just 1.
Quote:Originally Posted by danthemanThis zipdebt is a commercial
Quote:
Originally Posted by dantheman This zipdebt is a commercial site and this forum does not allow promotion of any such. But I will say that the blog is good stuff. But it misstates a very important aspect of insolvency: That is, the insolvency must be immediately preceeding the cancellation of the debt according to IRS pub 4681. So, it is NOT at the end of the year as that blog indicates. It is EACH debt that is forgiven and is calculated IMMEDIATELY BEFORE the debt is cancelled. The IRS pub also indicates each cancelled debt needs to be calculated for insolvency "immediately before" each debt cancellation. So I have 12 of these to do...not just 1. |
Hey Dan-
I think you need to re-read that blog. I just did and he does not say to use the end of the year and he does say to do one for each debt you settle and use the settlement date. He says that from HIS standpoint he thinks settlement date is the date the payment is due to the creditor. I dont see where he says use the end of the year in the insolvency calculation.
I am in no way promoting ANY site. I think that if you google the hell out of an issue, you will find some good things. I liked this blog on this issue. He keeps you thinking that a 1099 on your "gift" as the IRS sees it, will still be cheaper than paying the debt AND in most cases, insolvency is true for the recipient.
While later in his blog he does clarify it, I am referring to th
While later in his blog he does clarify it, I am referring to the beginning portion.
Quoting:
Come January, you receive 1099-C forms from the creditors you settled with, and the total of those forms adds to $25,000 – the amount of debt that was forgiven. Since you are “insolvent” by $29,000, you can exclude the full $25,000 saved during the negotiation. In this situation, no extra tax liability would result from the 1099-Cs issued for the settlements, and the insolvency exemption has come to the rescue.
++++++++++++++
So he is talking about the combined "total" of the forgiven debt. Insolvency may change with each settlement. And this specific example uses a total of the forgiven debt in order to assess solvency. And according to the IRS that is not correct.
Regarding my comment about it being a commercial site with the promotion being a violation of the rules, it is what it is and it is. I am a member and I abide by the rules. You are not a member and make your own rules unless you get deleted.
Feel free to call me out if I am wrong, but kindly join the forum if you want a dialogue with me.
Quote:Originally Posted by danthemanWhile later in his blog he d
Quote:
Originally Posted by dantheman While later in his blog he does clarify it, I am referring to the beginning portion. Quoting: Come January, you receive 1099-C forms from the creditors you settled with, and the total of those forms adds to $25,000 ??? the amount of debt that was forgiven. Since you are ???insolvent??? by $29,000, you can exclude the full $25,000 saved during the negotiation. In this situation, no extra tax liability would result from the 1099-Cs issued for the settlements, and the insolvency exemption has come to the rescue. ++++++++++++++ So he is talking about the combined "total" of the forgiven debt. Insolvency may change with each settlement. And this specific example uses a total of the forgiven debt in order to assess solvency. And according to the IRS that is not correct. Regarding my comment about it being a commercial site with the promotion being a violation of the rules, it is what it is and it is. I am a member and I abide by the rules. You are not a member and make your own rules unless you get deleted. Feel free to call me out if I am wrong, but kindly join the forum if you want a dialogue with me. |
I dont think that I did anything wrong by the mere mention of where I found some info. I posted no link and I just sent the OP to a place that I felt had a great deal of insight in laymans terms to his question about insolvency.
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#6. Please try to avoid posting extract from any press release, email, newsletter, web page in the forum (since it might be copyright material). Instead you can give an external link (in deactivated form) to a related page or express it in the forums in your own words. Any such copy-pasted materials found in the forums are liable to be deleted or replaced with a related link (in deactivated form).
No need to get snarky with me, and last time I checked, you dont have to be signed up to make a posting, or else you wouldnt be reading my comments! have a good one.