1099 tax question

[chrisdfw]

Ugh but thank you that does give me some clarification. I have never owed money to the IRS before so would I be able to setup a payment arrangement with them after my BK is discharged in June?

You probably do not owe taxes on the entire amount. It is quite complicated and dependent on the estate. In general you only owe taxes on the gain, which is the difference between the basis and selling price. For example if you buy a stock for 20 and sell it for 40, you owe taxes on 20.

When someone dies they can get a stepped up basis on part of the estate. So the basis of the house MIGHT be the value on the date of death. If sold shortly thereafter there would be little gain. But it depends on the size of the estate and some other details.

I don't practice accounting in this area but my good friend does and we've had many discussions as it is something he has dealt with both personally and professionally.

[justbroke]

Ouch.

[Carmella]

Ugh but thank you that does give me some clarification. I have never owed money to the IRS before so would I be able to setup a payment arrangement with them after my BK is discharged in June?

I would talk to whoever prepares your taxes or if you do them yourself ask friends if they have a trusted tax preparer to get advice on how to handle it. The IRS will take payments when in BK, but won't set up a plan. I am making voluntary payments throughout BK since we usually owe and don't have money just to pay it. It probably didn't help we lost our daughter as our exemption the year of our BK which I wasn't thinking about we usually owed, but then we owed MORE!

Once BK is over they would probably set up a plan with you. Since the timing is close do find a tax preparer who can give you info or ask a few to see what options are if you can do an extension that sounds more feasible.

[shipo]

Ugh but thank you that does give me some clarification. I have never owed money to the IRS before so would I be able to setup a payment arrangement with them after my BK is discharged in June?

I'm far from an expert, but I'm thinking if you file an extension, wait for your discharge, and then file your taxes, you should be able to set up a plan.

[brit929]

Ugh but thank you that does give me some clarification. I have never owed money to the IRS before so would I be able to setup a payment arrangement with them after my BK is discharged in June?

[shipo]

I'm like 95% sure that money is taxable, just like the rest of the money you've sent to the Trustee over the last nearly 5 years. Sorry to be the bearer of bad news.

[brit929]

Hello All I am in a Chapter 13 and my last payment will be in June. I inherited property along with my brother from my Dad when he passed in 2020. We sold the house last year for a cash price of $60,000 which was split between me and my brother. I just received a 1099 from the buyers attorney which showed that I received $30,000. I did receive that amount but $27,000 was given to the trustee to put into my Chapter 13 and I received $3,000. My question is do I have to pay taxes on $30,000 even though most of that went directly to the trustee. Any advice would be appreciated