My grandfather typically doesn't file a return because he receives only a small pension and is not required to. He received some 1099-C (cancelation of debts) this year; does that cause him to file a return to report the 1099-C? If so, this will cause a significant tax due which he will not be able to afford on his limited income. Any suggestions?
2007-04-03 19:38:42 · 2 answers · asked by branshome 1 in Business & Finance ➔ Taxes ➔ United States
If he was insolvent at the time of the COD there is no income and therefore no tax due. File Form 982 with his tax return to claim the exclusion due to insolvency.
2007-04-03 20:02:08 · answer #1 · answered by Bostonian In MO 7 · 1⤊ 0⤋
If grandpa was NOT insolvent, such that he didn't pay his debts because he didn't want to, then the 1099C's ARE reportable income!
Inslovent=debts exceeded assets on the day of cancellation of debt.
--A Damn Fine Tax Advisor
2007-04-05 15:38:27 · answer #2 · answered by WealthBuilder 4 · 0⤊ 1⤋