In March 2006, son wants to buy waterfront land to build rental/vacation home. Does not have good enough credit so talks mother into signing loan papers with him. Purchase price $162,000. Both monther and son are on deed and mortgage ($145,800) filings. In 2009, son loses job and can not make payments - real estate market bottoms out and can not sell it. Ends up with short sale on 7/9/10 for $24,900. Mother receives 1099-C for $120,603 with 0.00 in FMV box. She has too many assets for insolvency and ends up with big tax bill. Loss on sale only gives her $3000 capital gains loss. My best idea is to get 1099-C transfered into son's social security number since I think he will qualify for insolvency. Question - is there a way to transfer 1099-C to son without going through bank since that would probably be a losing battle. Any other suggestions would also be appreciated to help mother.
