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Can a financial company submit a 1099C form manufactured…

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Can a financial company submit...
Can a financial company submit a 1099C form for a manufactured home that was repoed in March 2007? The company listed the debt cancellatiion date as July 30, 2015 but this not true.
Submitted: 2 years ago.Category: Legal
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2/23/2016
Lawyer: legalgems, Lawyer replied 2 years ago
legalgems
legalgems, Lawyer
Category: Legal
Satisfied Customers: 13,339
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a few minutes please as I look into this for you.

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Lawyer: legalgems, Lawyer replied 2 years ago

Thank you for your patience. A 1099c is to be issued, pursuant to Treasury Regulation 26 CFK 1.6050P-1, upon the occurrence of an identifiable event- and the 1099c has certain boxes to help determine which identifiable event the lender is relying on (basically inserting the regulatory language); for example:

Code B — Other judicial debt relief. Code B is used to identify cancellation of debt as a result of a receivership, foreclosure, or similar federal or state court proceeding other than bankruptcy.

this helps determine the amount the 1099c should be issued for in foreclosure cases:

https://www.irs.gov/uac/Home-Foreclosure-and-Debt-Cancellation

Note that the 1099c should not be issued if the consumer is insolvent; nor on non recourse loans.

For more information please see:

https://www.irs.gov/publications/p4681/ch02.html, specifically:

If you don't make payments you owe on a loan secured by property, the lender may foreclose on the loan or repossess the property. The foreclosure or repossession is treated as a sale from which you may realize gain or loss. This is true even if you voluntarily return the property to the lender. If the outstanding loan balance was more than the FMV of the property and the lender cancels all or part of the remaining loan balance, you also may realize ordinary income from the cancellation of debt. You must report this income on your return unless certain exceptions or exclusions apply. See chapter 1 for more details.

Borrower's gain or loss. You figure and report gain or loss from a foreclosure or repossession in the same way as gain or loss from a sale. The gain is the difference between the amount realized and your adjusted basis in the transferred property (amount realized minus adjusted basis). The loss is the difference between your adjusted basis in the transferred property and the amount realized (adjusted basis minus amount realized). For more information on figuring gain or loss from the sale of property, see Gain or Loss From Sales and Exchanges in Pub. 544.

So most people will include the forgiven debt in the year the foreclosure occurred. The 1099c is typically issued by the end of January in the year following the identifiable event. However, the Mortgage Debt Forgiveness Act of 2007 allows homeowners facing foreclosure to exclude income from cancelled debt from the discharge of debt on a qualified principal residence. The Act covers foreclosures, canceled debt in connection with a foreclosure and mortgage restructuring between 2007 and 2012.

So if documentation is submitted showing the Act applies, the lender can submit an amended 1099c (to reflect zero). Thank you for using Just Answer.
I hope the information provided was useful.

Here is a link to the bar association's legal referral site:
http://apps.americanbar.org/legalservices/lris/directory/

Should you have further questions please post here; otherwise kindly

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