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Do I have to file a 1099 C on my tax return?

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Do I have to file a 1099 C on my tax return?

Postby baynebridge53 » Mon Mar 18, 2013 6:40 pm

I filed a bk and received a 1099-C for $24,000 from a heloc I have on a foreclosed home. Do I have to file this with my 2012 income tax?
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Do I have to file a 1099 C on my tax return?

Postby patton » Mon Mar 18, 2013 6:53 pm

You have to report the income on form 982, but you may meet one of the exclusions available for bankruptcy, insolvency, or qualified principle residence debt. For a HELOC to meet the requirements for qualified residence debt exclusion you must have used the funds to acquire, construct, or substantially improve the home. Bankruptcy is pretty self explanatory. Insolvency exception applies if you had more liabilities than assets right before the debt was forgiven and only applies to the extent you were insolvent. For example if you have 24,000 in debt and 10,000 in assets only 14,000 can be excluded for insolvency.

http://www.irs.gov/pub/irs-pdf/p4681.pdf
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Do I have to file a 1099 C on my tax return?

Postby goraidh61 » Mon Mar 18, 2013 7:05 pm

Unless there is a bankruptcy trustee filing a return for you, this needs to go on YOUR return.

If the debt was discharges in bankruptcy, go directly to form 982 filling in both parts. If the debt was NOT discharged, you have to prove insolvency first or show that this was money used to buy your home.

Part II is not easy, so I would recommend hiring someone.

There is some information in IRS pub 4681.
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