Cancelation of debt cosigner

[4567twins]

What is the name of your state (only U.S. law)? I live in Louisiana my husbands dad got a business loan but garenteed it personally and my husband cosigned. Now his dad is filing bankruptcy but we are not able to do that. We paid $22,000 towards the debt and the rest will go to COD, who will get this debt or income? I am willing to pay the taxes on half of the money minus the $22,000 but I am not sure who will get the COD. Will it be us since we paid the money or will it go to the original signer on the loan?

 

[LdiJ]

What is the name of your state (only U.S. law)? I live in Louisiana my husbands dad got a business loan but garenteed it personally and my husband cosigned. Now his dad is filing bankruptcy but we are not able to do that. We paid $22,000 towards the debt and the rest will go to COD, who will get this debt or income? I am willing to pay the taxes on half of the money minus the $22,000 but I am not sure who will get the COD. Will it be us since we paid the money or will it go to the original signer on the loan?

The 1099-C will go to whoever had their social security number listed as primary on the loan.

 

[4567twins]

Are u sure the man from Alabama was the co-signer and he paid loan and the COD 1099C came in both of their names but his tax ID #. So he ended up responsible for the taxes.

 

[4567twins]

Are u sure the man from Alabama was the co-signer and he paid loan and the COD 1099C came in both of their names but his tax ID #. So he ended up responsible for the taxes.

 

[4567twins]

The 1099-C will go to whoever had their social security number listed as primary on the loan.

Are u sure the man from Alabama was the co-signer and he paid loan and the COD 1099C came in both of their names but his tax ID #. So he ended up responsible for the taxes.

 

[LdiJ]

Are u sure the man from Alabama was the co-signer and he paid loan and the COD 1099C came in both of their names but his tax ID #. So he ended up responsible for the taxes.

Yes, both of their names will show up on the 1099C, but only one tax ID number (ie social security number) will appear on the form. That will be the social security number of the person who is listed as primary on the loan.

 

[4567twins]

Yes, both of their names will show up on the 1099C, but only one tax ID number (ie social security number) will appear on the form. That will be the social security number of the person who is listed as primary on the loan.

So if the person with tax ID on it doesn't pay the taxes will they again come after us? And since the tax I'd person is suppose to file bankruptcy can he file a insolency(not sure if that's right) on the COD? This is weighing heavily on my mind thanks for all your help.

 

[LdiJ]

So if the person with tax ID on it doesn't pay the taxes will they again come after us? And since the tax I'd person is suppose to file bankruptcy can he file a insolency(not sure if that's right) on the COD? This is weighing heavily on my mind thanks for all your help.

Cancellation of debt is excludable from income, for income tax purposes, in a bankruptcy as well as insolvency.

 

[4567twins]

Cancellation of debt is excludable from income, for income tax purposes, in a bankruptcy as well as insolvency.

So if the person with tax ID on it doesn't pay the taxes will they again come after us? Is there anyway we can end up with this COD since he can not pay the taxes?

 

[tranquility]

The theory of COD is the borrower gained benefit from the loan and never paid it back-giving him in a very real sense, income. Think for a second, if we all just "loaned" everyone something in each transaction, and then forgave the "loan", we could have full economic activity without ever paying taxes on income.

If you were merely a co-signer and gained no benefit from the loan, you did not have income. If you gained some benefit, the question is more difficult and you should see a tax professional to review your facts.