Has your client received a 1099-C? Is your client in foreclosure? The tax treatment of cancelled debts is extremely complex and poses a significant challenge to affected taxpayers.
In this seminar, presented by the Taxpayer Advocate Service, a panel discusses debt cancellation and provides tools to help your clients accurately report this item on their tax return. It was filmed in August 2009 at the IRS Nationwide Tax Forums in Orlando, FL.
Please download Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals), to follow the example in the seminar.
In January 2009, the National Taxpayer Advocate, Nina E. Olson, released her 2008 Annual Report to Congress. In the report, Ms. Olson identified cancellation of debt income as one of the most serious problems facing taxpayers and made a legislative recommendation concerning cancellation of debt income.
A brief discussion of the cancellation of debt income issue is on page 2 of the Executive Summary of the report. "Understanding and Reporting the Tax Consequences of Cancellation of Debt Income" on page 39 and "Simplify the Tax Treatment of Cancellation of Debt Income" on page 391 of the Report have in-depth discussions.
