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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
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Experience:  Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
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Thanx for your answer. You said that I cannot use the cancelled

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Thanx for your answer. You said that I cannot use the cancelled debt...Can I use the loan amount of 320000 that was on the home prior to the short sale.
Submitted: 1 year ago.
Category: Tax
Expert:  Megan C replied 1 year ago.
Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

Thank you for you question. You would include the mortgage as debt, but then you would also count the fair market value of the home as asset. Therefore, the portion of the debt that is counted towards your insolvency is the amount that has been discharged.

Please let me know if you need anything additional. Thanks again for using JustAnswer.com and have a great night.

** Please take a moment to rate my response as "Excellent" so that I may be compensated for assisting you today. Please let me know if my assistance was anything less than "OK Service", as I am compensated based on whether or not I have assisted you with your issue. If you need further clarifications, PLEASE WAIT TO RATE MY ANSWER UNTIL AFTER RECEIVING FOLLOW UP FROM ME. If I receive anything less than OK Service, I do not get paid. Thank you for your kind understanding in this matter. If you have difficulties rating, then simply respond stating that you are having difficulties rating and thank me for my excellent, good, or ok service and we can get the rating applied by the site. This answer is not financial or legal advice, and must not be used as such. For financial and legal advice, please contact a local professional.*
You should be aware that your question, as with most tax questions, can never really be answered completely...addressing all the permutations; that is because of the many assumptions that have to be made I have done my best to determine what I think you are asking and answering it in the most direct and understandable manner possible. If, however, after reviewing the questions, you have any uncertainties or further questions, please do not hesitate to ask.

Customer: replied 1 year ago.

Hi


 


Sorry to keep bothering you, but does that mean that the price that the house sold for can be used as my debt for example 240000..I believe thats what the house sold for. 80000 was let go by the bank


 


so 240000 + my credit card debt plus car pyments etc etc is my debt right....


 


and assets are my 401k plus bank savings right...


 


I am just trying to be clear so I can fill out the insolvency worksheet


 


thanx

Expert:  Megan C replied 1 year ago.
Thank you for your follow up.

The mortgage balance before the short sale would be included in your debt.

The fair market value of the house would be counted as an asset.

Your assets are everything you own - your house, vehicles, housewares - if you look at the insolvency worksheet they will list out all of your assets.

Your debt is what you owe - the mortgage, credit card debt - any debt that you have.

When your debt exceeds your assets then your insolvent. You can exclude income up to the amount of debt you are insolvent by.

So, if you had $200,000 in assets and $300,000 in liabilities, you could exclude up to $100,000 of cancellation of debt from your income.

However, if you had $200,000 in assets and $100,000 in liabilities you could not exclude any of the cancellation of debt.

Thanks again for using JustAnswer.com and have a great night.

** Please take a moment to rate my response as "Excellent" so that I may be compensated for assisting you today. Please let me know if my assistance was anything less than "OK Service", as I am compensated based on whether or not I have assisted you with your issue. If you need further clarifications, PLEASE WAIT TO RATE MY ANSWER UNTIL AFTER RECEIVING FOLLOW UP FROM ME. If I receive anything less than OK Service, I do not get paid. Thank you for your kind understanding in this matter. If you have difficulties rating, then simply respond stating that you are having difficulties rating and thank me for my excellent, good, or ok service and we can get the rating applied by the site. This answer is not financial or legal advice, and must not be used as such. For financial and legal advice, please contact a local professional.*
You should be aware that your question, as with most tax questions, can never really be answered completely...addressing all the permutations; that is because of the many assumptions that have to be made I have done my best to determine what I think you are asking and answering it in the most direct and understandable manner possible. If, however, after reviewing the questions, you have any uncertainties or further questions, please do not hesitate to ask.

Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 12580
Experience: Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
Megan C and 7 other Tax Specialists are ready to help you
Expert:  Megan C replied 1 year ago.
Thanks for allowing me the opportunity to help you. Please let me know if I can be of any further assistance to you in this matter. Also if you ever need anything else in the future please Simply enter "MyVirtualCPA" in the subject of your question Thanks again for being a JustAnswer customer
Customer: replied 1 year ago.

hi


Can one be partially insolvent. For example, I have a(NNN) NNN-NNNN...and I am 45000 from being insolvent...so would I owe tax on 65K.


 


Thanx

Expert:  Megan C replied 1 year ago.

Thank you for your follow up. If your assets are less than your liabilities by $45,000 then yes, you would owe tax on $65,000 of the debt forgiveness.

 

Please let me know if you need anything else. Thanks again for using JustAnswer.com and have a great day.

 

** Please take a moment to rate my response as "Excellent" so that I may be compensated for assisting you today. Please let me know if my assistance was anything less than "OK Service", as I am compensated based on whether or not I have assisted you with your issue. If you need further clarifications, PLEASE WAIT TO RATE MY ANSWER UNTIL AFTER RECEIVING FOLLOW UP FROM ME. If I receive anything less than OK Service, I do not get paid. Thank you for your kind understanding in this matter. If you have difficulties rating, then simply respond stating that you are having difficulties rating and thank me for my excellent, good, or ok service and we can get the rating applied by the site. This answer is not financial or legal advice, and must not be used as such. For financial and legal advice, please contact a local professional.*
You should be aware that your question, as with most tax questions, can never really be answered completely...addressing all the permutations; that is because of the many assumptions that have to be made I have done my best to determine what I think you are asking and answering it in the most direct and understandable manner possible. If, however, after reviewing the questions, you have any uncertainties or further questions, please do not hesitate to ask.

 


Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 12580
Experience: Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
Megan C and 7 other Tax Specialists are ready to help you
Expert:  Megan C replied 1 year ago.
Thank you for the positive rating. Please remember me the next time you have a question. Simply enter "MyVirtualCPA" in the subject of your question, and it will be routed directly to me. Thank you again for using JustAnswer

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