Posted on: 28th Jan, 2010 08:09 pm
I recently posted this question below but I'm still not clear on something..does my BK not protect against the lender coming after me in the below scenario? and would I report this on my tax return? please help..
"H I just recieved a 1099 A for a rental property that was foreclosed in January 2009..I filed CH 7 BK in April 09 and was discharged on Nov 09..the loan was included in my BK..Box 2 shows $232154 for outstanding principal..Box 4 shows $249023 for FMV..Box 5 is cheked as YES..what does this mean am I liable for any taxes to be paid? Thank yoo
"H I just recieved a 1099 A for a rental property that was foreclosed in January 2009..I filed CH 7 BK in April 09 and was discharged on Nov 09..the loan was included in my BK..Box 2 shows $232154 for outstanding principal..Box 4 shows $249023 for FMV..Box 5 is cheked as YES..what does this mean am I liable for any taxes to be paid? Thank yoo
Hi njda,
Lender sends a borrower a 1099A form if there has been any deficiency from the foreclosure sale of the house. If the lender forgives the deficiency from the foreclosure, a borrower is generally liable to pay taxes on this forgiven debt. But you have been discharged from bankruptcy and you will not be liable to pay off the deficiency.
I think the following page on the IRS site can help you clear your doubts. It clearly states that debts discharged through bankruptcy will not be taxed. Refer to the "Is Cancellation of Debt income always taxable?" section in the following page:
http://www.irs.gov/individuals/article/0,,id=179414,00.html .
Lender sends a borrower a 1099A form if there has been any deficiency from the foreclosure sale of the house. If the lender forgives the deficiency from the foreclosure, a borrower is generally liable to pay taxes on this forgiven debt. But you have been discharged from bankruptcy and you will not be liable to pay off the deficiency.
I think the following page on the IRS site can help you clear your doubts. It clearly states that debts discharged through bankruptcy will not be taxed. Refer to the "Is Cancellation of Debt income always taxable?" section in the following page:
http://www.irs.gov/individuals/article/0,,id=179414,00.html .