Patrick Michael Posted March 29, 2017 Report Share Posted March 29, 2017 Why does it seem I always get this odd ball situations that I have never dealt with before late in the season! Mother co-signed for her daughter on a car loan. Daughter defaulted and loan was forgiven. Both mother and daughter received a 1099-C. My research led me to Treasury Regulation Sec. 1.6050P-1(7) that says that for purposes of filing, "a guarantor is not a debtor." Mother has tried to get the creditor to correct the 1099-C but they refuse. Is this another case where I should include the income on line 21 and then back it out on line 21 with an explanation that the 1099-C was issued in error to avoid a CP2000 notice? Thanks. Quote Link to comment Share on other sites More sharing options...
ILLMAS Posted March 29, 2017 Report Share Posted March 29, 2017 For the same amount or half and half and different SS#? Quote Link to comment Share on other sites More sharing options...
ILLMAS Posted March 29, 2017 Report Share Posted March 29, 2017 For the same amount or half and half and different SS#? Quote Link to comment Share on other sites More sharing options...
Patrick Michael Posted March 29, 2017 Author Report Share Posted March 29, 2017 Same amount on both, one in the mother's SSN and the other in the daughters SSN. Quote Link to comment Share on other sites More sharing options...
Catherine Posted March 29, 2017 Report Share Posted March 29, 2017 I'd put it on Line 21 with a back-out also on Line 21. Since you've already looked up the regs, have a pdf in the client folder ready for if/when the CP2000 notice comes. 2 Quote Link to comment Share on other sites More sharing options...
Pacun Posted March 29, 2017 Report Share Posted March 29, 2017 File form 982 if they were insolvent. They were liable for the whole amount each and they were both forgiven that amount. Creditor is correct and there is no way the creditor will bend the rules. Let's say that the daughter was insolvent, then she files 982 and she is off the hook. If the mother was solvent, she will have two choices, to pay for the debt or pay taxes on the debt forgiven. Quote Link to comment Share on other sites More sharing options...
ILLMAS Posted March 29, 2017 Report Share Posted March 29, 2017 2 hours ago, Patrick Michael EA said: Same amount on both, one in the mother's SSN and the other in the daughters SSN. This stinks, imagine if mother and daughter go to a different preparer they both pay taxes for the same amount Knowing the IRS they might want for your client to contact the creditor and to correct the 1099-C to the proper person. Quote Link to comment Share on other sites More sharing options...
Pacun Posted March 30, 2017 Report Share Posted March 30, 2017 They both were responsible for the full amount and each saved money by not paying (yes, don't sign for anyone). You are right, one can pay the creditor and take both off the hook or they both can pay taxes on that amount. 1 Quote Link to comment Share on other sites More sharing options...
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