IRS Form 1099-C... A few questions?
IRS Form 1099-C... A few questions?
1) I know one of the exemptions for paying tax on a 1099-C is insolvency- what is insolvency and does it apply only to businesses or to personal taxes as well?
2) After the 1099-C is filed by the creditor can they continue to try to collect the debt?
Answers:
v b: 1) It applies to businesses too.
2) The creditor issues the 1099-C when they are no longer collecting the debt. So keep the 1099-C copy forever.
2008-11-28 23:10:22
2008-11-28 23:10:22
Chosen Answer
wartz: Insolvency means that your debts exceed all you assets, including ones that creditors can't seize, If you file bankruptcy, the cancellation of debt income is discharged. When the creditor cancels the debt, it is gone. If you ever have a debt collector threaten to issue a 1099C, you know they are lying because they would be throwing away any collection potential for nothing.
2008-11-28 23:15:03
wartz: Insolvency means that your debts exceed all you assets, including ones that creditors can't seize, If you file bankruptcy, the cancellation of debt income is discharged. When the creditor cancels the debt, it is gone. If you ever have a debt collector threaten to issue a 1099C, you know they are lying because they would be throwing away any collection potential for nothing.
2008-11-28 23:15:03
chatsplas: What it means is that the creditor decides the debtor is a deadbeat and they're not going to collect the money deadbeat lawfully owes creditor. Creditor issues deadbeat a 1099-C because deadbeat got the benefit of all that money, and it is now treated as income to deadbeat because their obligation to repay it is gone. Once creditor issues 1099-C, no more collection on debt, as it's OFF their books.
2008-11-29 09:11:19
2008-11-29 09:11:19