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Re: Does a 1099c "complete" the deal?


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Posted by Taziblue (65.229.184.79) on October 14, 2003 at 10:00:34:

In Reply to: Does a 1099c "complete" the deal? posted by Barn on October 13, 2003 at 23:42:31:

Yes. For example, you settle a 10,000 debt for 5000.00. The creditor issues a 1099C for the remaining 5000.00. This is reported to the IRS, which considers it income to you. This must be reported on your next return as income.

Exceptions: you still need to report this amount on your taxes, but - if you meet certain criteria, you do not have to pay taxes on this amount. Main one: you are insolvent during the year that the 1099C was issued. (You owe more than you own.)

The 1099C is this case, is debt forgiveness.

If you are considering settling, make sure that you will receive a 1099C. Get it in writing before you send one dime.




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