Tag Archives: Cancellation of Debt (COD) Income

Mortgage Unpaid

Today TaxMama® hears from GADS in the TaxQuips Forum, with this issue that I probably should not make public: “A 2 family house has been rented for the last 5 years. Both units are rented. The owner stopped paying the mortgage 18 months ago. He still is collecting rents and reporting them on Schedule E. […]

Short Sale

Today TaxMama® hears from YbSick in the TaxQuips Forum, with a common question.  “In a short sale where they abandoned the property and they receive a cancellation of debt, is it non-taxable since it was on their personal residence? Is there a time limit on how long after they move out of the property it […]

Net Operating Losses

Today TaxMama® hears from several people in the TaxQuips Forum about this topic. “Net Operating Losses have some special qualities that make them very desirable for tax purposes – even if they result from disasters in an economic sense. It’s important to understand how to use them, or you can waste them.”

Warning to Co-signers

Today TaxMama® hears from Toni in the TaxQuips Forum with this sad problem. “I volunteer with AARP Tax-Aide. Last week a taxpayer brought in a 1099-C with his other papers. It turns out he had co-signed for a vehicle. When the vehicle ‘owner’ disappeared, the lienholder collected a reduced amount from the co-signer. It was […]

Homes and Attributes

Today TaxMama hears from Cathy in the TaxQuips Forum with this question. “Are taxpayers required to file Form 982 when their Principal Residence is foreclosed on? If so, would they check off Part 1, 1e “Discharge of qualified principal residence indebtedness”? If the Cancellation of Debt for a foreclosure is a principal residence, attributes do not […]

Loan Modification Tax Effect

Today TaxMama hears from Janet in the TaxQuips Forum with a quick question. “We have applied for a loan modification on our home.  Will that have any affect when we file taxes next year?  I’d ask the loan counselor, but they are impossible to reach.”

Legal Fees on Cancelled Debt

Today TaxMama hears from Carole in the TaxQuips Forum, with this interesting question. “Can a person deduct legal fees paid to lawyers that negotiated their debt (both personal & business credit cards as well as a mortgage on their personal home) as an itemized deduction? I’ve read that legal fees for collecting or producing taxable income […]

Debt Negotiation

Today TaxMama hears from Robert in the TaxQuips Forum, with a painful issue. “I am considering working with a company that will hopefully negotiate my debt. It will involve stopping payments to creditors and turning negotiations over to a law firm with a limited power of attorney. I need to know how this could affect […]

California FTB Audits – Guaranteed Income

TaxMama note:  The Franchise Tax Board is starting these audits of people who have been relieved of debt in one manner or another. Odds are, at least 30% – 40% of the audits will turn up errors, with taxes due. I bet that 10% – 15% will turn up errors in the taxpayers favor, where […]

Short Sale, Now What?

Today TaxMama hears from Toki in the TaxQuips Forum, with a problem, “I bought my house in 2005 and it is now upside down. I decided to try and have my loan redone and got shafted out of $4,000, having a third party to do it for me. I stopped making my payments and I […]