Yardley CPA Posted March 27, 2011 Report Share Posted March 27, 2011 I have a client who filed MFJ until his wife passed away in 2009. Included in this years information that he sent me is a 2010 1099-C sent to his deceased wife, showing cancelled credit card debt of over $11,000. This year taxpayer will have a filing status of "single" since there are no qualifying dependants. My question: must the taxpayer include the 1099-C sent to his deceased wife on his return and show the cancelled debt as Other Income? Thanks! Quote Link to comment Share on other sites More sharing options...
Pacun Posted March 27, 2011 Report Share Posted March 27, 2011 I have a client who filed MFJ until his wife passed away in 2009. Included in this years information that he sent me is a 2010 1099-C sent to his deceased wife, showing cancelled debt of over $11,000. This year taxpayer will have a filing status of "single" since there are no qualifying dependants. My question: must the taxpayer include the 1099-C sent to his deceased wife on his return and show the cancelled debt as Other Income? Thanks! Sounds like you needed to file a 1041 in 2009 and continue in 2010. Quote Link to comment Share on other sites More sharing options...
Pacun Posted March 28, 2011 Report Share Posted March 28, 2011 Does any one have an opinion on this one? Quote Link to comment Share on other sites More sharing options...
grandmabee Posted March 28, 2011 Report Share Posted March 28, 2011 I have a client who filed MFJ until his wife passed away in 2009. Included in this years information that he sent me is a 2010 1099-C sent to his deceased wife, showing cancelled credit card debt of over $11,000. This year taxpayer will have a filing status of "single" since there are no qualifying dependants. My question: must the taxpayer include the 1099-C sent to his deceased wife on his return and show the cancelled debt as Other Income? Thanks! I would not claim it on his single return this year. It would go on her estate return 1041. insolvent? Quote Link to comment Share on other sites More sharing options...
Terry D EA Posted March 28, 2011 Report Share Posted March 28, 2011 I agree with bcolleen but, there may be a question of timely filing of the 1041 due to the fact the spouse died in 2009. Without all of the facts, it would appear that her estate is insolvent. If Jainen would chime in here I am sure he knows the proper action to take. This will be interesting to see the outcome. Quote Link to comment Share on other sites More sharing options...
Yardley CPA Posted March 28, 2011 Author Report Share Posted March 28, 2011 I have a client who filed MFJ until his wife passed away in 2009. Included in this years information that he sent me is a 2010 1099-C sent to his deceased wife, showing cancelled credit card debt of over $11,000. This year taxpayer will have a filing status of "single" since there are no qualifying dependants. My question: must the taxpayer include the 1099-C sent to his deceased wife on his return and show the cancelled debt as Other Income? Thanks! Since posting this entry, I've done a bit of research, mainly through Google, and came upon another community that extensively debated this same topic. The overall consensus was to do nothing. The wife passed away, the 1099C came in her name with her SSN, the credit card company wrote off the amount owed. Here are a few excerpts from that dialogue: "If there was no estate administered, there was no fiduciary appointed. Why doesn't the widower just do nothing? If IRS ever requests a return, respond that the taxpayer is deceased and left no estate. As a practical matter you shouldn't have cancellation of debt because it appears there was no consideration given in exchange for cancellation of the balance. (As in paying a percentage.) The credit card company has just written off a bad debt as uncollectible." "Lawyers alert: If I'm not mistaken, unless a tax is assessed before death, and possibly a Notice of Federal Tax Lien filed, transferee liability cannot be imposed on the heirs who inherit the property of the deceased taxpayer." "Thanks to all who wrote in. I just spent an hour trying to answer this question using Quickfinder handbooks, JK Lassers handbook, and IRS publications 17, 559, 4681, as well as searches on the IRS webpage, to no avail. And yet this is a very simple question, and must happen often. In my case, there is no estate, nor assets, and I just wanted to make sure, in black and white, that the income wasn't included on the spouses' tax return. I know that it shouldn't be, I just wanted to be sure, and have the supporting guidance." I am not saying I completely subscribe to and agree with their conclusion, but I am leaning toward doing nothing. I still would appreciate this community's thoughts. Quote Link to comment Share on other sites More sharing options...
GERALD Posted March 28, 2011 Report Share Posted March 28, 2011 I had a similar situation about 5 years ago. Couple married in their 60's, she died in'o6, received a 1099C in '07 for 10K in her name & SSN. Did nothing. Never heard a word. Quote Link to comment Share on other sites More sharing options...
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