Taxes on discharged debt
Date: Wed, 03/24/2010 - 13:37
When a chapter 7 is filed and completed are any of the discharged debt subject to the IRS rule regarding settlements? This is where if you settle with a creditor outside or prior to a BK action any difference in settlement versus actual owed is subject to a 1099 and considered taxable.
Does this same rule apply to BK-7's?
Does this same rule apply to BK-7's?
I guess you can wipe out tax debts, by filing Chapter 7, if the
I guess you can wipe out tax debts, by filing Chapter 7, if the taxes are all income taxes. There shouldn't be any deceptive tax return or willful avoidance of paying taxes.
Moreover, the debt must be at least 3 years old and the IRS must assess the tax debt at least 240 days before the filing of bankruptcy.
Chapter 7 actually helps to discharge your personal accountability and prevents the IRS from deduction. But if a tax lien on your property will be recorded by the IRS before you file for bankruptcy, the tax lien will stay and you will have to pay it off for selling the property.