Thank you for the information . . . I understand, however I would like clarification on your 1099 comment. Is this an IRS requirement upon writing off a bad receivable?
No, Paula, there is no published guidance on any REQUIREMENT to provide a 1099 for this.
Having finished a seminar on this very topic I can tell you that it would be seen as a best practice and is certainly allowed, when you have truly written off, hence, forgiven, the debt.
The IRS will tell you that because this entity's net wealth has increased that income taxes are owed.
But the only time that one is REQUIRED to send the 1099 is when you have formally FORGIVEN the debt. (and the only real documentation of that would be a letter to the entity)
There is no requirement at this time.
Positive feedback (or an “accept”) is highly appreciated. That’s the only way we’re paid. BUT, if you need CLARIFICATION, COME )BACK here. Also, feel free to bookmark this page to come back for reference.