CapOne 1099-C What do I do?

[JoeKing]

I settled a debt with CapOne because they disputed my debt which I included in my BK7. BK7 discharged in 8/09. My atty. stated suggested to settle because I used the credit card to pay for my property tax. However, the debt was settled for $2200.00 out of approx. $13K debt. Do I need to report this 1099-c as income even though the box on form included in BK.

Help please... I am ready to file my taxes and I don't want uncle sam on my back.

[Pizza]

According to the IRS, if you receive a 1099-C, add up your assets and add up your debts.

If your debts exceed your assets, you just have to fill out the worksheet that proves your insolvency, and you do not owe taxes.

If your assets exceed your debts, you owe taxes on the amount of forgiven debt to the extent of the difference between assets and debts.

[catleg]

If the 'bankruptcy' box on the 1099-c is checked, you don't have to worry about taxes.

[BKDefender]

The IRS form to report all this is IRS Form 982.

--William