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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10104
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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PARTNERSHIP HAS CANCELLATION OF DEBT INCOME. THESE LOANS HAD

Customer Question

PARTNERSHIP HAS CANCELLATION OF DEBT INCOME. THESE LOANS HAD ACCRUED INTEREST, IS THAT INCLUDED WITH THE COD INCOME. THEY ARE ACCRUAL BASIS.
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Hi,

...

The only way you'll know for sure is to see what the lender puts on the 1099-C.

...

If the interest was being capitalized it will be.

...

But the bot***** *****ne definition of Cancellation of Debt income is the amount forgiven by the lender

Customer: replied 1 year ago.
THERE IS NO 1099-C FROM THE LENDERS TO REFER TO.
WE HAVE EXPENSED THE INTEREST SO WOULDN'T IT BE TAXABLE?
Expert:  Lane replied 1 year ago.

Conceptually that's correct. If you expensed it, and this created a tax benefit ( a lowering of taxable income), that would be right

...

... just wanted to give you the heads up that what IRS will consider as COD income will be the amount on that 1099-C (the amount the lender has written off themselves) ... i.e., amount forgiven ... said differently, money borrowed but not repaid

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