Taxes With A Lien Strip

[morrrach]

I am in the process of filling for a chapter 13. We are above the median income for our state and our lawyer wants to have our exemptions changed to reflect the loss of tax with the lien strip. As I was having our tax preparer go over the different calculations she told me we would have to pay taxes on the portion of the striped money that was not used specifically for the house. She estimates a tax bill for the lien strip of $18,000 at the end of the bankruptcy. Is this correct? The government will tax me for the lien strip?

[HHM]

No, you will not responsible for taxes on the lien strip if it is done within the BK.

[StartingOver08]

Find another tax preparer! I had one like that maybe 9 yrs ago - the amount of taxes I paid because of that ill informed tax preparer were astronomical!

Anyway, I finally moved my business to a professional CPA (that knows what he is doing and stays on the right side of 'the line') and my tax bill became much more reasonable. He even was able to get me a refund for the overpayments for the three years prior to coming to him.

His fee was higher by a little, but my taxes were lower by a lot. The error your tax preparer made is huge - after all its their business to know.