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If you file a Bankruptcy (Chapter 7 or 13), you will not have to pay income tax on the 1009-C difference between what is owed on the mortgage and what the building is sold for.
Even if it is an office building?
You do not have to pay income tax on any 1099-C amount for any type of property if you file a Bankruptcy. The form you have to file with your tax return does not distinguish among types or property.
Do I have to file Chapter 13 before they foreclose on the property to not pay taxes or is it before they sell the building at the lower price than what the mortgage was for?
Here is the form you have to file with your tax return (after a Bankruptcy is filed) to avoid having to include the 1099-C amount as income:
The rule is you have to file a Bankruptcy at any time before you file your tax return for the tax year in which you are issued the 1099-C form.
If you are not issued a 1099-C form, then you do not have to file a Bankruptcy.
Just a second, and I will find the form you have to file.
Wow that is a big relief because I just had a lake lot foreclosed on me too this year already and I thought I was toast by not filing Chapter 13 in time.
Thanks a million!!!!!!!!!!!!!!!!!!!
What do I do now to give you high marks?
Do you see the green (I think they are green) happy faces?
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