Yardley CPA Posted March 17, 2010 Report Share Posted March 17, 2010 I have a client who received two 1099-C forms reflecting cancelled credit card debt amounting to over $11,000. The cancelled debt is not the result of a bankruptcy. I know it is taxable for federal purposes, but I am unable to verify whether it should be included on the New Jersey return? I was not able to find anything pertaining to cancelled debt in the New Jersey instructions which leads me to believe it is not taxable, however, I would like to be sure. Quote Link to comment Share on other sites More sharing options...
Crank Posted March 17, 2010 Report Share Posted March 17, 2010 Sorry I dont have an answer for you but I need to know the same thing for Pennsylvania. As for the federal, my client has about $41,000 in cancelled credit card debt for which he received 1099-C's. If I am reading Publication 4681 correctly the debt can be excluded from income if the client was insolvent immediately prior to the cancellation of the debt. My clients net worth was negative $132,000 ... so far. Still waiting to value a few more assets and liabilities. Quote Link to comment Share on other sites More sharing options...
jklcpa Posted March 17, 2010 Report Share Posted March 17, 2010 Crank, here's a link to PA guide to individual taxes that will help you: http://www.revenue.state.pa.us/portal/server.pt/community/revenue_home/10648 Clicking on the first link to a PDF is for chapter 24 of PITGuide. The discussion of cancellation of debt starts on pg 7. Quote Link to comment Share on other sites More sharing options...
Crank Posted March 18, 2010 Report Share Posted March 18, 2010 Thanks JKL! Yardle, sorry I didnt mean to hijack your thread. Hopefully someone wil be along shortly to help you with the treatment of NJ cancelled debt. Quote Link to comment Share on other sites More sharing options...
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