Whats funny with the IRS is things like you have to pay taxes on buying a car... shouldnt they be charging the people made the money not the one who paid it lol......
What's the IRS have to do with it?? Never heard of them wanting a share of it.
That's kind of scary.
g
Brief explanation:
Credit card company took a $3,500 loss by settling the debt. In order to deduct the bad debt from their taxes, they need to issue a 1099-MISC to Cam for the $3,500. He then needs to report that amount as income.
The theory behind this is that when a creditor borrows money and does not repay it, that money that was not repaid is effectively income.
Whats funny with the IRS is things like you have to pay taxes on buying a car... shouldnt they be charging the people made the money not the one who paid it lol......
To the best of my knowledge, the IRS does not collect taxes on the purchase of a car.
The seller of the car (and the manufacturer) do pay federal income taxes on their profits from the sale.
Whats funny with the IRS is things like you have to pay taxes on buying a car... shouldnt they be charging the people made the money not the one who paid it lol......
The IRS does not tax the purchase of a car.
~Terry
The government does money goes into the same pool sooner or later. Not sure who it really goes to but anytime you title a car from out of state in maryland you pay the sales tax. Not sure if that actually goes to motor vehicles or not.
Credit card company took a $3,500 loss by settling the debt. In order to deduct the bad debt from their taxes, they need to issue a 1099-MISC to Cam for the $3,500. He then needs to report that amount as income.
The theory behind this is that when a creditor borrows money and does not repay it, that money that was not repaid is effectively income.
~Terry
That is almost exactly what the IRS told me.
So, I will cut the check. but I wont have a smile.
We got in a car crash. We were awarded a sum from the other side. Our health insurance wanted a cut of the awarded sum. What our health insurance takes, we're claiming it as a loss of income to the IRS.
Credit card company took a $3,500 loss by settling the debt. In order to deduct the bad debt from their taxes, they need to issue a 1099-MISC to Cam for the $3,500. He then needs to report that amount as income.
The theory behind this is that when a creditor borrows money and does not repay it, that money that was not repaid is effectively income.
~Terry
That is almost exactly what the IRS told me.
So, I will cut the check. but I wont have a smile.
But you can appeal that if the $3500 loss is less than your fees and penalties. Fees and penalties can not be counted as income since you did not borrow those. Example would be if you had a CC with $6500 dept that you borrowed but due to whatever you get behind and accrue $3500 in fees and penalties making you owe $10000. They settle for $6500, that $6500 has to be what you borrowed before, fees and penalties. Kind of like a bank account - deposits post before debits. Since the remaining $3500 is fees and penalties then the CC company can not count it as a loan and the IRS can not send you a 1099-Misc. for unearned income. Of course the IRS will not tell you that just like the CC company didn't tell you that you would receive an IRS 1099.
Credit card company took a $3,500 loss by settling the debt. In order to deduct the bad debt from their taxes, they need to issue a 1099-MISC to Cam for the $3,500. He then needs to report that amount as income.
The theory behind this is that when a creditor borrows money and does not repay it, that money that was not repaid is effectively income.
~Terry
I am sure that you are right, but that is a really harsh system. I don't think that there are many jurisdictions where the unpaid portion of a compromised debt is counted as income.
