2007-02-02 06:44:04 · 6 answers · asked by Dee B 1 in Business & Finance ➔ Taxes ➔ United States
It sounds like you are talking about "cancellation of debt" the amount written off is considered income to you since you didn't pay it. So the answer is yes you will have to pay tax on this amount.
Very likely you will receive a 1099-C from the bank for the amount written off.
See IRS site below.
2007-02-02 07:09:11 · answer #1 · answered by CPA 2 · 0⤊ 0⤋
Sorry, I don't understand your question. The only taxes that should have been involved were local excise taxes due the state where you live. These should have been paid when you registered the car in your name.
What you should be worried about is that even though the debt has been written off? They can still come after you for any balance due, get a judgment and garnish your wages.
2007-02-02 14:51:54 · answer #2 · answered by ? 7 · 0⤊ 0⤋
They can make you pay taxes on the amount written off - as if it were income. If the loan company sends it to the IRS - you'll have to pay.
2007-02-02 14:54:19 · answer #3 · answered by ldgbt 3 · 1⤊ 0⤋
Probably not. If the debt was cancelled which is unlikely they may send to you a 1099C. But if you were insolvent at the time they cancelled the debt then it will not be taxable to you. See Pub. 908
2007-02-02 18:09:38 · answer #4 · answered by woodluvto 2 · 0⤊ 0⤋
If you owed taxes on the vehicle for that year then yes they can. The car was licensed in your name, so you are responsible for the taxes.
2007-02-02 14:51:48 · answer #5 · answered by Shelley 4 · 1⤊ 0⤋
yes. Forgiven debt = income.
2007-02-02 15:12:31 · answer #6 · answered by vegas_iwish 5 · 0⤊ 0⤋