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Law Educator, Esq.
Law Educator, Esq., Lawyer
Category: Real Estate Law
Satisfied Customers: 118688
Experience:  Licensed attorney practicing landlord-tenant, land use and other real estate law and litigation.
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I just received a 1099-C from the SBA which says my 408,000

Customer Question

I just received a 1099-C from the SBA which says my 408,000 SBA loan from Hurricane Katrina has been discharged. I know I may owe taxes on it
JA: Because laws vary from state to state, could you tell me what state is this in?
Customer: I am in Louisiana. Does this mean the loan balance is now forgiven. I had originally borrowed 480,000, but got in financial trouble and stopped making payments 2008
JA: Have you talked to a lawyer yet?
Customer: no
JA: Anything else you think the lawyer should know?
Customer: I am sure what he needs to know
JA: OK. Got it. I'm sending you to a secure page on JustAnswer so you can place the $5 fully-refundable deposit now. While you're filling out that form, I'll tell the Real Estate Lawyer about your situation and then connect you two.
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Law Educator, Esq. replied 1 year ago.
Thank you for your question. I look forward to working with you to provide you the information you are seeking for educational purposes only.
If you were given a 1099-C it means they have written off the loan and as such it is deemed income to you as the recipient. It does not mean SBA cannot sell the bad loans off (they often do) to junk debt collectors to try to collect and if the junk debt collector does manage to collect then anything you paid taxes on for them writing the loan off would be adjusted when you file your new returns. But yes, it means the loan has been written off by SBA as they believe it is not collectable, so now you have to claim the amount on your taxes as income.