GAFFNEY v. COMMISSIONER OF INTERNAL REVENUE Leagle.com
Pursuant to section 7463(b), the decision to be entered is not reviewable by any other court, and this opinion shall not be treated as precedent for any other case.Respondent determined a deficiency in petitioner's Federal income tax for 2006 of $31,179 and a penalty under section 6662(a) of $6,236. After concessions, the remaining issues for decision are: (1) Whether petitioner is required to include in income $90,845 of cancellation of indebtedness income for taxable year 2006 as reported by Bank of America; and (2) whether petitioner is liable for the accuracy-related penalty under section 6662(a).
Background Some of the facts have been stipulated and are so found.The stipulation of facts and the exhibits attached thereto are incorporated herein by this reference. At the time he filed his petition, petitioner resided in Oregon.
Notice of Deficiency and Procedural BackgroundPetitioner timely filed a joint income tax return for 2006. Upon examination of petitioner's return, respondent determined that petitioner failed to include $90,845 of cancellation of indebtedness income as reported for 2006 by Bank of America on Form 1099-C, Cancellation of Debt, and issued a notice of deficiency on March 9, 2009. Respondent also determined a penalty under section 6662(a) of $6,236. On June 3, 2009, petitioner filed a petition claiming that the cancellation of indebtedness income reported on the Form 1099-C was erroneous.
1099 C Cancellation of Debt
1099 C Cancellation of Debt at Falcon Credit Management is one of a variety of debt management services we specialize in.
1099-C Cancellation of debt - still have to pay, why claim?
I received a 1099-C Form for Cancellation of Debt for a credit card. It was cancelled, but I'm paying for this debt in monthly installments. Why is it that it's considered income when I'm paying the debt? Is there a way around this? It seems ridiculous that it's considered income when I'm repaying it. Then again, I'm not a pro with these things. Any information will help!
A cancellation of debt is when you settle a debt for less than the full amount. For example, the account was 5k, and you paid 3k to settle the account. Technically the remaining 2k is considered "income" and that's taxed (because you were actually liable for 5k).
What they MIGHT have done was cancel part of your debt if you agreed to pay off some of it. An example is if you owe $4,000 and can't pay any longer. After they try to collect for several months, they will usually call you and try to "make a deal". They'll say "what about if we lower the amount you owe to $2,500 and give you 4 years to pay with monthly payments of $53.00?" And you agree to that.
Well, the difference of what you are going to pay back (in the example $$1,500) is reported as Cancellation of the Debt on 1099-C.
I would guess that is the kind of arrangement you made even if you weren't aware of how it worked when you made it.
I have a 1099-C (Cancellation of Debt) from my financial aid lending company. How to file it with Taxcut?
I have a 1099-C (Cancellation of Debt) from my financial aid lending company. $595.00 was cancelled in 2006.
a) Do I need to claim it as income (or did they make it $595.00 specifically because there is a $600.00 limit or something)?
b) If I do need to claim it, how the heck to I do that using H&R Block Taxcut? I have never had a problem with their program before, but this year I have this weird form and have no idea where it goes. I searched for 1099-C in the program and got nothing...a bunch of 1099's but no -C.
For Peggy K:
This is the last time I use Block. My login was working one minute, but it logged me out after 5 minutes, and after that I could not log back in. Said "Three unsuccessful attempts, locked out after 20 minutes." 20 minutes later, same BS. Opened a second account, tried to get my question answered, but it says my Key Code on the back on my CD sleeve from Premium Federal, State, +eFile is no good. But, they will still let me use a credit card to pay for it, thank goodness! And I love that there is no phone number available to call them. Ridiculous.
Anyway, not sure where exactly you are telling me to claim this $595 in my taxes, but I tried it under 1099-MISC and it ended up raising the amount I owe by like $100.
Never mind, got the first login to work....awaiting phone call.
I work for Block, and I don't remember seeing anything in their software for a 1099-C, just pulled up my personal copy of TaxCut and, just like you, didn't see it there either.
I think... you should just enter it as "other income" and describe it as "1099-C cancelled debt" in the same general location in the "flow" as you'd put jury duty or other things. It should appear on the front of the 1040, just above the Adjustments to Income section.
I believe that's where I'd put it if I were doing your forms for Block.
This isn't like a capital gain, and there ought not be any additional taxes associated with it, like a capital gain or like pulling $ out of a retirement fund. Sure hope this helps.
Question about a Debt Cancellation. Form 1099-C?
If you receive a 1099 Debt Cancellation Form and it states that a debt has been cancelled. Can you ever get title for a vihicle or trailer if you have them in your possesion? If you can how would you do it?
It is up to the creditor that settled to send you that title. They are supposed to once the debt is closed.
That 1099-C form is an electronic notice to the IRS that you have been forgiven over $600 worth of debt, and you may be expected to pay taxes on that forgiven amount.
Cancellation of Debt 1099-C and creditors responsibility in reporting it?
A creditor filed a Cancellation of Debt on me in 2004, I reported the debt as income and paid taxes on it. They are still reporting the debt on my credit reports as "charged off" and that I still owe the money. When will this stop being reported as it has been 3 years, or what should I do about it?
The "Charge-Off" is an accounting term the Creditors use for reporting it does not have anything to do with the debt owed. So the "Charge-Off" will continue to be reported for 7 years from the date of the last delinquency on the account.
However, if the creditor issued you a 1099-C the balance on the Charge-Off should show a 0 balance. If it shows any balance still owed you need to dispute that with each Credit Reporting Company.
We had a cancellation of debt form 1099-c sent to us..?
how do we find out if it was a gain or a loss? ( it was a car repo) the amount of cancelled debt was 8,000 and the cars fair market value at the time was 8,500. we also paid the debt in a settlement. Any help will be appreciated.
Can a credit Union file a 1099-c (cancellation of debt) AND garnish wages for the same loan?
Once a debt is cancelled, it cannot be collected.
Call them and ask what's up.
Does form 1099-C (cancellation of debt) have to be entered?
I am doing my girlfriend's taxes through H&R Block's website with their "tax cut" software. I have done this for the last 3 years with no problems but this year she has a form 1099-C (Cancellation of Debt) form that she hadnt ever received before.
I am trying to enter it on there because I just assumed that you would have to...but there doesnt seem to be anywhere to put it and when I search the "help" section for 1099-c, nothing comes up at all...
...but I look online for more info and it looks like some of the other tax softwares do have a specific place to put this form's info in....
So is anyone familiar enough with the Tax Cut software and/or the 1099-C form that you would be able to tell me where/how to put this info in and/or whether or not this is really necessary to put in????
THANKS!
Thank you all for the information you have provided...I just wanted to give everyone a heads up about the info posted about Credit Solutions....In the past I followed up on a similar post I had seen (in fact, it read WORD FOR WORD the same as the one below). I have never worked with a less professional company. They are very quick to be sure to take every penny of the money you pay them in monthly fees. They then make the exact same settlements with companies that the companies would make with you personally....then all the ones that actually take any work to settle get left for 2 years while you continue to pay fees. No matter how hard you work to get them to fix THEIR banking errors, they still treat you unprofessionally and dont read the notes of the last 14 people you talked to about the same mistake---even when it is THEIR mistake. I would warn ANYONE, no matter how bad your situation, to STEER CLEAR of that "company"...they are huge scam. Which I know from personal experience.
She should report the 1099-C on line 21 of Form 1040. See page 4 of IRS Publication 544.
However, if it is from foreclosure of primary residence in 2007 (or 2008, 2009) it might not be taxed. See http://www.irs.gov/individuals/article/0,,id=179414,00.html
Do I have to file this 1099-C (cancellation of debt)?
I settled a debt with a credit card company. I owed them a certain amount but they offered me a settlement deal so that I could pay them less than what was fully owed and the debt would be "paid as agreed for lesser amount owed" is how they put it. Now I get a 1099-C with the remainder of the amount on it (what is left after I paid the deal...example. Say I owed $2000 and they offered to let me pay just $800 to settle the debt and cancel the card. Then they send me a 1099-C. The 1099-C shows a cancellation of debt for $1200). Do I have to claim that on my taxes? I'm trying to use the Taxslayer free tax software. I doesn't support 1099-C forms so I don't know where I would even claim this anyway.
This is referred to as phantom debt. Basically, banks are generally evil, and the IRS wants its cut of the money. You should list this as "other income" with a note to see your 1099-C. You cannot postpone this under the bankruptcy/insolvency rules. A court has to give you this status after being granted a bankruptcy.
IRS is saying I owe when Chase never sent me a 1099-C for debt cancellation?
Unless they can provide you a copy of the 1099-c there is no debt owed. Call them and ask before you get to many penalties.
Has anyone ever receive a 1099-c tax form for a consumer debt from a creditor?
Can a creditor send regular people an IRS Form 1099-C: Cancellation of Debt if it is a consumer debt and what for? Do people usually get these things in the mail from credit card and cell phone companies?
It claims the debts are supposed to be income because a person didn't pay and they wrote it off.
Yep- she's right. I had settled a consumer card for half of what I owed and I got one of those forms to file with my taxes this year. It basically states that you saved this much money, that technically you owed, so therefore it's considered income. You have to pay taxes on the amount you saved. I feel bad for people that go through debt settlement companies- you know? I don't think a lot of them realize that even though they are saving money right then- in the long run they are still somewhat responsible for it. Hope this answered your question hun- Good Luck!
Cancellation of Debt
With the economic situation dim in the United States, more taxpayers are facing overwhelming debt and bankruptcy. Taxpayers may find their tax returns affected by debt cancellation for 2008 and beyond. Taxpayers need to be aware of the rules for debt cancellation. Failure to comply with IRS regulations may lead to penalties and interest owed to the IRS.
If a debt is canceled or forgiven, other than as a gift or bequest, the taxpayer generally must include the canceled amount in income for tax purposes. A debt includes any indebtedness for which the debtor is liable or which attaches to property the debtor holds. Examples include losing a home to foreclosure, and defaulting on credit cards and car loans.
Under the Mortgage Forgiveness Debt Relief Act of 2007, a taxpayer may be able to exclude from tax up to $2 million of debt forgiven on a principal residence. The limit is $1 million for a married person filing a separate return. If the mortgage debt is partly or entirely forgiven during 2007, 2008 or 2009 the taxpayer may be able to claim special tax relief by filling out Form 982 and attaching it to the federal tax return for that year.
Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, may qualify for this relief. The debt must have been used to buy, build or substantially improve the principal residence and must have been secured by that residence. Debt used to refinance qualifying debt is also eligible for the exclusion, but only up to the amount of the old mortgage principal, just before the refinancing.
Debt forgiven on second homes, rental property, business property, credit cards or car loans does NOT qualify for the new tax-relief provision. In some cases, however, other kinds of tax relief, based on insolvency, for example, may be available. See Form 982 for details.
If the taxpayerÂ’s debt is reduced or eliminated he will receive a year-end statement (Form 1099-C) from his lender. By law, this form must show the amount of debt forgiven and the fair market value of any property given up through foreclosure. The lender must send this to the taxpayer no later than January 31.
...1099 cancellation of debt - News
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Debt - forgiven but not forgotten at tax time Scott Haislet, a CPA in Lafayette, says that 5 to 10 percent of his clients have cancellation-of-debt income, but many will not owe tax on it. and more » |
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You'll likely owe income tax on deals you make with creditors You'll likely owe income tax on deals you make with creditorsSome 2.5 million 1099-C debt cancellation forms from creditors will be sent to taxpayers and to the IRS for 2009, up 27% from 2008, according to the IRS. and more » |
Mortgage debt forgiveness may count as taxable income
News 8 AustinForm 1099-C: If your debt is reduced or eliminated, you normally will receive a year-end statement, "Form 1099-C, Cancellation of Debt" from your lender. You owe taxes on canceled credit, car debtCalifornians may have to pay tax on canceled mortgage debtA Never-ending Story: Tax Nightmares Follow The Short Sale Of My Homeall 19 news articles »
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IRS wants piece of consumers' canceled debt IRS wants piece of consumers' canceled debtAccording to the IRS, the number of 1099-C cancellation of debt forms filed by creditors and debt collectors nearly doubled between 2003 and 2008. and more » |
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Settled debt overlooked as income source on tax forms Tax advisers worry that people might overlook 1099-C forms or "cancellation of debt" tax notices. Persons who reached a settlement with lenders in 2009 for and more » |
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