Online Bankruptcy Lawyers
Bankruptcy Guide
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Bankruptcy: Searching Online For A Bankruptcy Lawyer
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Revealed: Pros And Cons Of Online Bankruptcy Lawyers
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Personal Bankruptcy Lawyer: Tips To Hire A Good One
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Hot: Filing Bankruptcy Online: Simple And Convenient
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acermill posted: 20 Oct at 3:20 pm
Yes, it could well be taxable income, as is the case with any legally forgiven debt. Thus, if your creditors wrote off a total of $20,000 and they report such to the IRS (and they WILL), you would need to claim that as taxable income in the year in which the debt was forgiven.
bostonianinmo posted: 20 Oct at 11:12 pm
No, it is not exempt. It’s taxable income to you. However if you were insolvent at the time of the debt forgiveness, the forgiven debt is not taxable to the extent that you are insolvent.
You are insolvent if your debts exceed the value of your assets. You claim this on Form 982 but will need to attach a set of financial statements to prove your insolvency.
For this reason it would be a good idea to seek professional assistance from a CPA or EA (NOT a seasonal part-timer at the tax prep mills!) if you are not familiar with the concepts behind setting up a balance sheet. You may want to weigh the cost of professional assistance vs just paying the tax on the forgiven debt. If the cost of professional assistance is more than the tax, it would make more sense to just pay the tax.
Max Hoopla posted: 21 Oct at 5:16 pm
If the Chapter 13 was dismissed, it is as though it never happened.