Finance Questions? Ask a Financial Expert for Answers ASAP
Thank you for requesting me
I'm sorry that you are not able to get the records.
Do you have any other means to substantiate the loss? Do you have any records whatsoever?
Unfortunately I do not. I never incorporated so the accounts, especially the business account was my only source for proof.
You did not keep accounting records?
No because my business was operating under a parent company that had the rights to operate the facility. I rented from them. As will other creditors, I did not end on a good note with him, so I don't expect to get any help from him.
Well, I hate to be the bearer of bad news, but without proof you could not claim the loss. If audited, the IRS would disallow the loss for lack of documentation
You would need some sort of proof.
Do you have any further questions?
So there is not recourse at this point? It seems unfair that the banks are not required to keep records since the CC company has lots of time to decide to forgive the debt. The 1099 was sent to an old address on Dec 2011. Had I received it then, I would have been able to address the issue within the time frame. Aren't they culpable on this?
Unfortunately, not because the regulations only require them to keep records for 7 years. IT's 7 years from the transaction, not 7 years from when the account is closed or written off, unfortunately
How can I find out if there are more of these 1099's that I don't know about. Can I get that from the IRS?
Yes, you can order a 1099 transcript from the IRS. You do that by filling out form 4506-T and selecting option 8
How far back do I need to go? I'm interested to know about 2012 and this year, but will I open a can of worms if I ask to go back further? Do you think they would have picked this up is there wasn't a glaring error (state tax refund was omitted)?
The IRS would have sent you a notice by now if you had a 1099 and did not claim it on a tax return. You can request transcripts for the last 6 years is all. You wouldn't open a can of worms by requesting the older transcripts
Also, you can't get the 2013 transcript until next year.
Do you think they would have picked this up without the State tax error?
Yes, I think they would have picked this up.
Final question. Do I need to continue to worry about this for the future. Is the any time limit for the CC companies to fogive the debt?
Unfortunately there's no limit to when a cc company can forgive the debt. I wouldn't worry too much...you will get the 1099 forms early in the year like around February
That's not the problem. This was a $2K cost for $7K forgiven. There is another $90K out there. Amazingly they are using our combined income as a base. If this is something that will be ongoing, I'll need to get a divorce just to lower my tax base
You can be insolvent on your own - you can claim insolvency even if your wife is solvent
How do I go about doing that? Since it's 2011 and I was married, I though it marital income
Remind me what state you're in.
Oh...that's the problem, it's a community property state
So divorce is the only solution going forward?
I would not get divorced just because of this.
Well, I calculate a potential liability of around $25K. We are retired and on fixed income. We can't afford that kind of liability
Are your assets less than $90,000?
No. We have IRA's. I'm not thinking of insolvency but incomes. I only have $1,833/mo of SS. My wife has a pension and SS
The IRS will set up payment plans that fit your budget.
I understand but the taxable amount would be much lower going forward with just my income. Correct?
Yes, your tax would be lower if you were single.
Ok. Sounds like the first step is to see if there are any 1099's for 2012 and 2013. Thanks for your help
You're welcome. Is there anything else I can assist you with today?
No that's it.