How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Mark Taylor Your Own Question
Mark Taylor
Mark Taylor, Certified Public Accountant
Category: Capital Gains and Losses
Satisfied Customers: 2308
Experience:  Certified Public Accountant
Type Your Capital Gains and Losses Question Here...
Mark Taylor is online now
A new question is answered every 9 seconds

In February of 2016 I received a year end tax statement that

Customer Question

In February of 2016 I received a year end tax statement that was mailed to me by someone I used to hire -- and had forgotten I owed money to (less than $500). I want to sort this out with them but I'm VERY confused by this statement! At the top it says: "Beginning Statement Balance: 0.00." The next line has these headers, reading from left to right: "Initials" "Post Date" "Description" "Comments" "Charge" "Credits" "Balance." The line immediately under the one I just mentioned reads: "ABC" (under "Initials"); "6/12/2015" (under "Post Date"); "Bad Debt Write-Off" (under "Description"); "Collection Agency" (under "Comments"); nothing/totally blank (under "Charge"); "-320.06" (under "Credits"); "$320.06" (under "Balance"). Next line down reads (under the same headers just mentioned, in the same order): "ABC" ;"6/12/2015"; "Pmt By Check"; "____ Law Firm" (it states actual firm name but for privacy I left the name blank); nothing/totally blank again under "Charge"; "$320.06"; "$0.00". The next line down reads only: "Total" "$0.00" (under "Charge"); "$0.00" (under "Credits"). Finally, the next line down -- the last line -- reads only: "Ending Statement Balance: $0.00" WHAT does all this mean?!is left totally blank; "Credits" says
Submitted: 11 months ago.
Category: Capital Gains and Losses
Expert:  Mark Taylor replied 11 months ago.

Hi my name is Mark. I will be happy to help you with your questions. Please give me a moment to prepare your response.

Expert:  Mark Taylor replied 11 months ago.

Did you repay the balance of $322.06?

Customer: replied 11 months ago.
No. The statement said "Ending Statement Balance: $0.00"
Expert:  Mark Taylor replied 11 months ago.

Based on the statement you should have reported cancellation of debt income of $322 on your tax return for 2015. Cancellation of debt income would be considered ordinary income unless an exclusion applied. Possible exclusion would be a bankruptcy or insolvency.

Customer: replied 11 months ago.
Sorry -- I may have made this more complicated than what I'm looking for. I owed them $492.50 -- so what is with the entirely different/lower amount this collection agency paid the school? Why did my statement show a zero balance? Did the collection agency BUY the debt from the school?
Expert:  Mark Taylor replied 11 months ago.

What is the form number that you received? So $492.50 was the amount that you owed?