What is the name of your state (only U.S. law)? CA
Five days after I efiled my federal tax returns (I got a refund eight days later) I received a 1099-C from a creditor who cancelled my $8,600 debt. I suppose that I now have to file an amended return, but, because my liabilities far exceed my assets, I am declaring involvency and should not have to pay taxes on the cancelled debt.
Most of the liabilities are charged-off debts from other creditors, which they still can collect.
But there is something fishy about the 1099-C. The cancellation is dated 4/08, yet the creditor continued to send me collection letters until 10/08.
I'ver also challenged the legitimacy of the debt by contacting two credit reporting agencies.
I'll repored the cancellation amount on Form 982, but there doesn't seem to be a place on Form 1040 to deduct the $8,600.
Isn't there somewhere on the 1040 where I can deduct the $8,600? Not even my tax preparation software (TaxCut) is helpful.
Has anyone else been in the same position?