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Subject Author Date
Insolvency question WD 03-20-2008
Posted by WD on March 20, 2008, 2:28 pm
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My girlfriend's w-2 lists 2519.70 in wages. 148.91 in Fed
tax

She recieved a 1099-c for debt canceled (automobile loan) of
1761.19.

She has no assets. (bad divorce) I was told she could declare
insolvency, ( by someone in this group) If she met the no assets
criteria. I have downloaded and filled out form 982.
So, is there anything I am missing in this procedure?
Just attach form 982 along with the 1040 and send in(?) or is there
more to it? Also I am assuming I do not show the 1761.19 on the 1040
as it is onform 982.

BTW I have declared her as a dependent, as she lived with me all year.

Thanks for any help

--
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<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
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Posted by D. Stussy on March 20, 2008, 2:52 pm
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>
> My girlfriend's w-2 lists 2519.70 in wages. 148.91 in Fed
> tax
>
> She recieved a 1099-c for debt canceled (automobile loan) of
> 1761.19.
>
> She has no assets. (bad divorce) I was told she could declare
> insolvency, ( by someone in this group) If she met the no assets
> criteria. I have downloaded and filled out form 982.
> So, is there anything I am missing in this procedure?
> Just attach form 982 along with the 1040 and send in(?) or is there
> more to it? Also I am assuming I do not show the 1761.19 on the 1040
> as it is onform 982.
>
> BTW I have declared her as a dependent, as she lived with me all year.
>
> Thanks for any help

She's not insolvent. As her income exceeded the debt, she had sufficient
funds with which to pay it off but chose not to. I am intentionally
disregarding living expenses since her total income wouldn't cover those
anyway (and by you declaring her as your dependent, you're paying for her
living expenses anyway).

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by WD on March 20, 2008, 6:33 pm
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wrote:

>>
>> I am assuming that the time period for all this will become the deciding
factor.

The cancellation of debt (1099-c) was in August, the income was in
Sept-Nov. What I read on the IRS web site was "insolvent" at the
time of the cancellation of debt. Make sense (?) or do I need more
of an education ?

Thanks

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Phil Marti on March 20, 2008, 10:04 pm
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"WD" wrote:

> The cancellation of debt (1099-c) was in August, the income was in
> Sept-Nov. What I read on the IRS web site was "insolvent" at the
> time of the cancellation of debt.

Then it's not income. All she does is file the necessary form with her
1040.

--
Phil Marti
Clarksburg, MD

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Haskel LaPort on March 20, 2008, 6:32 pm
Please log in for more thread options

>
> My girlfriend's w-2 lists 2519.70 in wages. 148.91 in Fed
> tax
>
> She recieved a 1099-c for debt canceled (automobile loan) of
> 1761.19.
>
> She has no assets. (bad divorce) I was told she could declare
> insolvency, ( by someone in this group) If she met the no assets
> criteria. I have downloaded and filled out form 982.
> So, is there anything I am missing in this procedure?
> Just attach form 982 along with the 1040 and send in(?) or is there
> more to it? Also I am assuming I do not show the 1761.19 on the 1040
> as it is onform 982.
>
> BTW I have declared her as a dependent, as she lived with me all year.
>
> Thanks for any help

Perhaps the debt cancellation is considered gross income and when added to
her wages results in a total greater than 3,400. If that is the case then
you can't claim her as a dependant.





>
> --
> << ------------------------------------------------------- >>
> << The foregoing was not intended or written to be used, >>
> << nor can it used, for the purpose of avoiding penalties >>
> << that may be imposed upon the taxpayer. >>
> << >>
> << The Charter and the Guidelines for submitting posts >>
> << to this newsgroup as well as our anti-spamming policy >>
> << are at www.asktax.org. >>
> << Copyright (2007) - All rights reserved. >>
> << ------------------------------------------------------- >>

========================================= MODERATOR'S COMMENT:
Please delete all unnecessary material from the prior post when responding.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

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