[WSBAPT] 1099-C Cancellation of Debt

Tue Jan 24 14:23:31 PST 2023

Believe it or not, I had a similar situation but it was with a lender and the amount was $400,000.00 (lender forgot to secure line of credit and 2 years lapsed).  One school of thought indicated she should report one-half as income, and given the potential penalties and interest, I encouraged that.  I should note she received her 1099 C in the beginning of the year following the year of the discharge and close of probate.  An attorney, whom I have the utmost respect for, indicated that because the debt was not enforceable there was no true forgiveness and the Executor should just hold on to the information. In this case I would defer to a cpa and just maybe provide the varying opinions.  I haven’t read Code Section 108 (discharge of indebtedness) in awhile so I’m a little rusty.

Ultimately, I would suspect that it is not reportable given the date of reporting by Wells Fargo (my personal opinion only).

Diane J. Kiepe

Diane J. Kiepe
Douglas Eden
717 W. Sprague Ave.
Suite 1500
Spokane, WA  99201
djkiepe at depdslaw.com<mailto:djkiepe at depdslaw.com>
509-455-5300

From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Inge Fordham
Sent: Tuesday, January 24, 2023 2:12 PM
To: WSBA Probate & Trust Listserv <WSBAPT at lists.wsbarppt.com>
Subject: Re: [WSBAPT] 1099-C Cancellation of Debt

I have a similar situation.  Please reply to the list.

Thank you!

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Inge A. Fordham | Attorney
Fordham Law, PLLC
3218 Sixth Avenue | Tacoma, WA 98406
Office: (253) 348-2657 | Mobile: (206) 778-3131
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From: <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> on behalf of Brent Williams-Ruth <brent at williams-ruthlaw.com<mailto:brent at williams-ruthlaw.com>>
Reply-To: WSBA Probate & Trust Listserv <WSBAPT at lists.wsbarppt.com<mailto:WSBAPT at lists.wsbarppt.com>>
Date: Tuesday, January 24, 2023 at 2:11 PM
To: WSBA Probate & Trust Listserv <WSBAPT at lists.wsbarppt.com<mailto:WSBAPT at lists.wsbarppt.com>>
Subject: [WSBAPT] 1099-C Cancellation of Debt

Mighty Brain Trust -

Today I received a 1099-C for the cancellation of debt from a Wells Fargo credit card.

This debt was never presented as a creditor claim. The amount is $627.47.

The estate closed under regular process - Decl of Completion - on January 20, 2022. The creditor period expired on August 14, 2021.

Other than providing this information to the former Executor - I am open to guidance as to how to respond. It was reported as discharged on July 2, 2022. More than a year and a half after death.

Thank you.

Brent Williams-Ruth (pronouns: he/him)
Attorney-At-Law

Law Offices of Brent Williams-Ruth, a division of BWR Consulting, PLLC

Physical Address: 500 S 336th Street, Suite 214; Federal Way, WA 98003

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