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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10433
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I got a 1099-C form on a vehicle that is over 8 yrs. old.

Customer Question

I got a 1099-C form on a vehicle that is over 8 yrs. old. Are they allowed to go back that many years? Also, I was on this loan with my mother who is now deceased but they sent her the same 1099-C for the same amount. They can not produce any information on what they sold the car for. I had to return it to the dealership because I became disabled and had no income at the time.
Submitted: 11 months ago.
Category: Tax
Expert:  Lane replied 11 months ago.

Hi,

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I hold a JD (Juris Doctorate, a doctoral degree in the law), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance & tax, as well as CFP® and CRPS designations. - I’ve been providing financial & tax advice since 1986.

I can help here

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Please don't shoot the messenger, but again, so sorry, this is legal. As a matter of fact it's actually a requirement.

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You should see an alphabetic "identifiable event code" in Box 6 on the form.

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If you see an "H" in the box, that means that means that they're following the IRS requirement to send the 1099-C when you haven't made a payment on a debt in the last three years, and they haven't made a significant effort to collect in the past year.

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Yes, one the many strange rules, from IRS (all of them typically having to do with the IRS collections division trying to collect what they call "ALL NET INCREASES IN WEALTH.") ... They will say that because money was borrowed but not paid back, it's effectively income, and taxable.

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HOWEVER, there IS some good news here; (1) You aren't responsible for the half of the debt that was your mother's ... (In CCM###-##-####- http://www.irs.gov/pub/irs-wd/0023001.pdf ) the Office of Chief Counsel advised that the discharge co-obligors of the full amount of a joint and several obligation by a creditor should not be treated as income to each co-obligor of the full amount of the discharged obligation, but rather an appropriate allocation of the discharged debt.)

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and (2) if you were insolvent at the time OF this identifying event (meaning that your debts - including THIS debt -was more than your assets, you can use IRS form 982 to "answer" that 1099-C to EXCLUDE the other half from being taxed.

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I'd be glad to help you through it.

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Let me know if you have questions

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If this HAS given you enough, I'd really appreciate your positive rating … (by using the stars or rating request on your screen) … … That’s the only way JustAnswer will credit me for the work.

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Thank you, ***** ***** let me know if you need more...

Lane

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