What can I do if I received a $15,000 tax notice due to cancellation of loan modification debt? 1 Answers as of July 28, 2010
Litton Loan sent a 1099 to the IRS saying I had extra income of 48,000. I never received a 1099 from them. Now the IRS is saying I owe them $15,000. What can I do? In all the paper work I signed with my loan modification I was never told the fact they were writing off a debt that would be income to me.Free Case Evaluation by a Local Lawyer!
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Law Offices of James C. Bechler, A.P.C. | James Bechler
There are many ways to avoid payment of 1099 income due to debt forgiveness. The most common ways are:
1) using the "insolvency test" -(prior to the debt forgiveness, were assets less than debts?)
2) Other ways include type of mortgage debt forgiven:(recourse vs. "non recourse") AND
3) tax moratoriums on debt forgiven on principal residences.
You need to speak with your CPA.
1) using the "insolvency test" -(prior to the debt forgiveness, were assets less than debts?)
2) Other ways include type of mortgage debt forgiven:(recourse vs. "non recourse") AND
3) tax moratoriums on debt forgiven on principal residences.
You need to speak with your CPA.
Answer Applies to: California
Replied: 7/28/2010
