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socrateaser, Lawyer
Category: Legal
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Experience:  Retired (mostly)
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How often IRS audit insolvency- we lost all our properties

Resolved Question:

How often IRS audit insolvency- we lost all our properties and filing insolvency.
I have very little documents due to moving around three times.
Submitted: 7 years ago.
Category: Legal
Expert:  socrateaser replied 7 years ago.

I can't say how often. I can say that if you are audited, the presumption will be on you to prove the insolvency.


This shouldn't be very difficult. You know how much money you have in various bank and investment accounts and you can get statements for those accounts for the month in which each property was foreclosed. You can get a real estate broker price opinion of each property for the date of foreclosure, and you know what your debt cancellation was from the 1099-C. Add up your account balances from the statements, add the price opinions of the property and subtract the 1099-C amount. If the number is $0.00 or less, you're insolvent.


Hope this helps.


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