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Jax Tax
Jax Tax, Tax Attorney
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Experience:  JD, LL.M in Business and Taxation, IRS Enrolled Agent. Expert in Business and Tax Transactions
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I received Form 1099-R from USAA Federal Savings Bank showing

Resolved Question:

I received Form 1099-R from USAA Federal Savings Bank showing taxable retirement income of $51,345. The retirement plan begain in 1963 while I was serving in the U.S. Navy. The plan was a combination of life insurance and potential future retirement income.

The capital gains resulted in interest earned on my contributions from 1963 until my financial situation changed in 1992 due to a company bankruptcy that caused me to file personal bankruptcy the same year.

When I could not make monthly cash payments to continue on the plan, the monthly amount was paid in the form of a loan taken on the net value of the policy. This arrangement continued until 2011 when the monthly payment could not be borrowed from the policy and I could not pay from my meager social security benefit.

The taxable amount on the Form 1099-R really reflects the amount of loans taken on the policy. The tax obligation exceeds $11,000 which I cannot pay now or in the future.

I have no assets other than an elevan year old Ford, an old computer and printer, a TV, and bedroom furniture. I have current debts exceeding $1,300.

Finally, the question: Can I file a Form 962 showing the $51,345 as a discharge of indebtedness rather than show it as retirement income?
Submitted: 4 years ago.
Category: Tax
Expert:  Jax Tax replied 4 years ago.

Jax Tax : Sorry, you cannot show the amount as discharge of indebtedness. You will owe the tax bit have options.
Jax Tax : 1. File form 9465 asking for a 60 month payment plan.
Jax Tax : 2. If you cannot afford that, file form 433f and if financially supported the IRS will consider the debt uncollectable until 10 years runs and the debt expires or your financial circumstances change which ever is shorter.
Jax Tax : 3. File form 433a and 656 offering an amount to settle the debt. I suggest hiring an attorney to handle this option.
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