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Chad Oberg
Chad Oberg, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 174
Experience:  10 + years of accounting and tax experience, financial statements and business planning
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Hello. My ex-wife and I recently divorced and then did a short

Resolved Question:

Hello. My ex-wife and I recently divorced and then did a short sale on our home. We both received 1099 forms this year for the same amount $139,000. This was the total amount of forgiven debt on the home. My ex-wife has agreed to pay the taxes on the forgiven debt. My question is, did the mortgage company screw up the 1099s? And does my ex-wife have to give me a check to give to the IRS to pay my half of the tax hit? Any help would be appreciated.
Submitted: 4 years ago.
Category: Tax
Expert:  Chad Oberg replied 4 years ago.

Customer,

 

If you cannot get out of paying the tax, (Very important see below) you both should report the full 1099 amounts on your returns and then have a reconciling amount underneath that backs out the others half. I would also include their social security number and a brief explanation on this line so it makes it easier for the IRS to track. Before you do this on either of your returns, I would do the following:

 

You may want to take a look at the insolvency rules on Form 982 and the See link below:

http://www.irs.gov/pub/irs-pdf/i1099ac_09.pdf

 

Also, there are new rules out for deferring recognition of the debt forgiveness. See link below:

 

http://www.irs.gov/individuals/article/0,,id=179414,00.html

 

IRS Publication 4681Canceled Debts,Foreclosures, Repossessions, and Abandonments

http://www.irs.gov/pub/irs-pdf/p4681.pdf

 

These are all helpful links and sometimes the forms can be somewhat cumbersome. However, as you already know the tax on $139,000 is a very large number. Please take the time to understand the rules or pay somebody that will diligently go through the steps to protect your money.

 

If you have any questions, please do not hesitate to contact me.

 

Regards,

 

Chad

 



Edited by Chad Oberg on 2/1/2010 at 7:27 AM EST
Chad Oberg, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 174
Experience: 10 + years of accounting and tax experience, financial statements and business planning
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