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Converting judgement against tenant to IRS
by Greg
on May 20, 2016 @18:47
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Hi, if you have a judgement against a tenant and have given up collecting it how do you turn it over to the IRS as a income gain?
I know there is a way to do this. Any ideas?
Thanks, Greg in Phoenix
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Re: Converting judgement against tenant to IRS
by Anonymous (CA)
on May 21, 2016 @21:51
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You would file a 1099c. You need to talk to your tax advisor.
However, the the only reason is payback, filing a 1099c probably won't work.
If their liabilities (including your judgement) exceed the fair market value of their assets, they are insolvent.
If they are insolvent, they will not owe any taxes for the 1099c. And now, they are completely off the hook.
They simply file a Form 982 with their 1040. Publication 4681 describes the process.
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Re: Converting judgement against tenant to IRS
by P-Bone (NY and OH)
on May 24, 2016 @11:00
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I am confused. If the tenant failed to pay you, you wouldn't have any income in relation to that debt, therefore, not claiming the revenue is your way of not paying tax on it. You can't then again take another deduction because you decide not to pursue a revenue amount you never had to begin with.
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