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Converting judgement against tenant to IRS - Landlord Forum thread 345080

Converting judgement against tenant to IRS by Greg on May 20, 2016 @18:47

                              
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 anon on May 20, 2016 @22:03 [ Reply ]
Deduct it as a bad debt on schedule E, I believe
Re: Converting judgement against tenant to IRS by Greg on May 21, 2016 @13:40 [ Reply ]
There is some form you can submit to the IRS. I don't think it's a schedule E.




Greg in Phoenix
Re: Converting judgement against tenant to IRS by Anonymous (CA) on May 21, 2016 @21:51 [ Reply ]
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.
Re: Converting judgement against tenant to IRS by anon on May 23, 2016 @00:12 [ Reply ]
It is not an income gain.
Re: Converting judgement against tenant to IRS by Magic Mike on May 23, 2016 @14:38 [ Reply ]
It's miscellaneous income to the tenant. Form 1099-C, Cancellation of Debt

Re: Converting judgement against tenant to IRS by P-Bone (NY and OH) on May 24, 2016 @11:00 [ Reply ]
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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