Form 1099C & bankruptcy

[tpotter0748]

What is the name of your state? Washington

We are about to pay off a chapter 13 bankruptcy, but I wanted to make sure our income tax has been taken care of first if it makes sense. (Returns must be submitted to the Trustee and they file with IRS.)

Situation: The main reason we filed was because we had purchased 2 manufactured homes on land in 2001 as rental investment property. (We obviously listed to the wrong advice. To bad I only now found this site.) In 2004, due to negative cash flow, we had used up nearly all of the $35k line of credit on our home. At the same time both properties went unrented. Attempts to sell failed. More bad advice from a young attorney took us into chapter 13.

Tax: We received a Form 1099C (Acquisition or Abandonment of Secured Property) on both properties. Every web site that mentions 1099C is either for the lender or says to have your taxes prepared by a professional. Some sites indicate that bankruptcy would remove liability for any tax, but no where can I find a worksheet (or instructions other than the IRS confusion). I did find one place that said the income is entered as "other income", but where do you get credit as part of the bankruptcy? Would H&R Block be able to deal with this?

1099C #1- box 2 = $159322.54, box #4 = $150000.00 (Income = $9322.54)
1099C #2- box 2 = $93617.70, box #4 = $100000.00 (Income = $0.00)
Would the loss on #2 ($6382.30) offset the gain on #1?

Thanks for any help.

[LdiJ]

It is not necessary to report the 1099-C income due to the bankruptcy.

[Snipes5]

Abandonment or Acquisition of Secured property is form 1099A. Have your taxes done by a professional.

Snipes