Business equipment repossessed time frame.

Forum|Forum|5 years ago
April 27, 2021
11 replies
30 views

Have a client who purchased equipment in January. In August he did a voluntary return. It is a recourse loan. I am told he hasn't heard from the lender since the equipment was resold other than to let him know he still owes approx 15K. When is this entered on the tax return? Shouldn't he have received a 1099-C or something similar from the lender? At that point would it be handled? For some reason, this isn't clear to me. This grey blonde is having a moment. Would appreciate someone remind me what I am forgetting.

ProSeries Professional

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PATAX

Level 12

Hi Rita , maybe he has not received a 1099-C because the lender told him he still owes $15,000 so apparently the debt has not been canceled or forgiven .. Just my opinion

R

ritastone001Author

Level 5

/Thanks for responding. So do we wait to report it on the return until he receives one? This is where I am not understanding the path to do it correctly.

PATAX

Level 12

In my opinion it appears as of now it is still a debt, and when the debt is Forgiven then it will be income... If you pick it up in 2020 as debt forgiveness income then what will you do if it is Forgiven in 2021 and then a 2021 1099-C is issued... and who knows maybe your client may come up on some money and pay that $15,000 debt off maybe.. Just my opinion

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