bill33 did SLS send you a 1099 after you sent in the money to settle? did they remove the lien on your house?
bill33 did SLS send you a 1099 after you sent in the money to settle? did they remove the lien on your house?
I have not received a 1099. The loan was settled in June of this year, so I am assuming that at the first of next year I will receive it (along with other tax docs [1098, W-2, etc.]).
In my case it will not be claimed as income due to the mortgage forgiveness act.
The lien was released. I received a statement from the county about three months after the settlement.
Thanks a lot for the information, Bill. I wonder if this is normal, I thought you would normally receive 1099C shortly after settlement....
Your assumption is absolutely correct. I believe the IRS requirement is they be sent no later than the end of February 2011.Originally Posted by bill33
What happens if they don't send 1099? I read online that there are a lot of collection agency for credit cards don't bother to send out 1099. I called IRS and the way it is supposed to be done is kind of complicated. If the debt is passed through a couple of collection companies then starting with the original owner each of the owner of the debt(assuming they sell it along the chain) has to send out a 1099c on the amount of the debt they forgive(so by the time it reach the end it should be a very small amount because they buy it on cents on dollar). I wonder if you can just forget it if nobody in the chain of debt ownership bother to send a 1099c to IRS.
If it were me, I wouldn't worry about it. Bear in mind that, although the 1009s are on IRS forms, and the IRS receives a copy, they are not issued by the IRS, and they often contain errors. If you do not receive a copy, then the IRS didn't receive one. So, you might elect to forget the debt forgiveness issue on that account.
As Tomeason said, "do nothing". If you didn't receive one, the IRS didn't receive one, and therefore they have nothing to match up with your SSN. So I would NOT report anything related to the Cancellation of Debt on your return. They are due by the end of February every year. If you do receive one, be sure to pick it up as income, then back it out of income on the same line (your tax accountant should know how to handle this).
They frequently do get prepared incorrectly, too, as Tomeason also said. I've had a few where the debt is recourse, but the box on the 1099 is checked so as to say it's non-recourse, stuff like that.
does it matter if it is recourse or nonrecourse? because the key is how much and when they forgive the debt which is supposed to be counted as income? Even it is non recourse that means they can't go after you after they foreclose on your house, but they can still file 1099C on IRS on you.
Lender can still file a 1099-C. There are remedies; and the saving grace for many is "insolvency", IRC Form 982. With all of your questions, I would recommend you visit your library, or purchase, one of the independent publishers who publish yearly, e.g. JK Lasser, Ernst & Young's Tax Guide, etc. You can also visit the IRS site to find plenty of info. And, of course, if you have a regular tax person, consult with them.
thanks for your advice tomeason. I did research on this subject and so far it seems 982 is the only way I can avoid being hit by a tax bill. I even call the tax payer advocate with IRS because my situation is too complicated for my tax guy. Basically if each of my creditors file 1099c and unless they all forgive my debt the same day it is very hard for me not to be hit with a tax bill. The guy in IRS basically is saying they will look at your liability and assets one day before the creditor forgiving the debt to determine if you are insolvent or not. So ideally would be the smaller debts are forgiven first and because my huge HELOC makes me negative in wealth, then HELOC is forgiven, then I am OK. But if it is the other way around, once HELOC was first wiped out then there is chance that I have enough equity that I would be in the positive wealth territory before they wipe out credit card debts. Anyway maybe not many people are in my situation. Just want to share with you guys(Almost sounds like "water fall" test in the loan mod process)
Also another issue I never quite understand is that without any forms like 1099C is the IRS totally in the dark? Here is a real example, a couple years ago I bought a piece of land from a guy. Since it is not a big amount we agree to going through escrow to save money, all I remember is he went with me to cash the cashier check I gave him at my bank. Now if going through an escrow they will file 1099 on the seller. Now thinking back was I supposed to file the form to let IRS know? He told me after cashing the check he is going to Cancun I assume he didn't intend to pay any tax if there is a capital gain...anyone knows how it works?
I think you can make the insolvency relief work for you. While getting advice from the IRS can be useful, bear in mind that many are not well trained, and definitely are not unbiased! If your tax guy doesn't understand insolvency, I'd recommend you seek another one, because you will be dealing with this on your 2011 return.
As to your question about the seller of land to you years ago, I can't answer your question. He may well have avoided the gain to the IRS, but I wouldn't be concerned about it. And since you are curious about the tax ramifications, to include academic questions, I still recommend you access one of the aforementioned publications. I'm not a tax professional; I'm an expert only at my own tax situation!
Thanks a lot, tomeason, I will try to find a CPA that knows how 982 works.... Thanks!!!
daneam my 1st loan is modified with citimortgage principal bal=309,000 deferred bal= 149,637 TOTAL=458,637 CURRENT
My second GMAC GOT MODIFIED HAVEN'T PAID SINCE MARCH 2009 BAL=54,000
Todays market my house would maybe be worth 450,000
Any info greatly appreciated.
Hey daneam, thanks for asking. . .Oh yea, 1st balance is modified with CitiMortgage 459,600. . .149,600 is the deferred amount. . . house next door just forecloused for approximately 320,000. . .
So now my 2nd GMAC asked to settle for 10,000. . . I told him I did not have the money. . .he asked how much I could pay. . .HA HA!!!. .. I told him 2,000. . .he said he would talk to his department head (RECOVERY) and let me. . .
He called me back the next day and said they refused the offer. . .but could I pay more in lump sum in 60 days. . .I told him yea, best I could do is 3,000. . .that was about a week ago no call since then.
Sorry, I just found your response today!. . .I appreciate any advise. . .
All the best in your journey. . .We all need to remember to KEEP THE FAITH!
gmazz
I have posted some guidelines on settling a 2nd on several threads. Here's one of them. http://www.loansafe.org/forum/countr...-your-2nd.html
Posting Permissions
Reply With Quote
Bookmarks