Taxpayer never brought in 1099-C in 2021 for $26,000 from citi mortgage company. They got a letter that they owe the IRS $7,505. Is there anything that can be done about this?
Check insolvency rules. If it’s CC debt and the taxpayer had more debt than equity you can look at the insolvency worksheet. You’d have to amend 2021 return.
I would calculate the clients 2021 return with the information from the 1099C to verify IRS amount due is correct. If it is correct - then the client will need to pay.
There are 12 states that, by law, only allow nonrecourse loans. These are known as “nonrecourse states,” and they include Alaska, Arizona, California, Connecticut, Idaho, Minnesota, North Carolina, North Dakota, Oregon, Texas, Utah and Washington."
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