Insolvency
It's my understanding that you should have gotten a form 1099-C
It's my understanding that you should have gotten a form 1099-C for $16000. This would be reportable as income. Please see IRS Form 982 and the worksheet here http://www.taxgirl.com/wp-content/uploads/2009/04/insolvency.pdf. I am not going to state whether you are or aren't insolvent. I am giving you some tools to decide for yourself.
You are insolvent!!!! Please read the instructions of the 982 fo
You are insolvent!!!! Please read the instructions of the 982 form. You have to go all the way to the end separate from the section on Bankrupcy. Just jot down assets in one column then assets in the other and substrate the liabilities from the assets.Then you state the following: I was insolvent to the amount of ( the amount of the substraction) on (date of the amount debt cancellation) of the amount of the debt. Therefore, I am not including the 1099-c on my tax return as income.
Insovency
Thank you both. I did receive a 1099. I also believe based on the criteria for insolvency that I would be considered insolvent. The question I have is if I am considered insolvent, would that apply to credit card debt settlement? My tax preparer says that insolvency cant be applied to credit card debt because the IRS only allows insolvency claims on debt tied to secured property. Because credit card debt is revolving, I have to add the amount forgiven to my income and pay taxes on it. Is that corrrect? Or if I am insolvent, can I include credit card debt? Thank You.