<div dir="ltr">I believe the answer depends on whether the debtor (Estate) is solvent or insolvent. Generally speaking, a debtor who is solvent <b>after </b>the debt is forgiven will have income to the lesser of their level of the assets or forgiven debt, unless the debt is forgiven through a bankruptcy discharge. An Estate is expressly identified as a qualifying debtor for 1099-C. <div><br></div><div>Example: If the estate is insolvent to the tune of ($100,000), but has $250,000 in debt forgiven or uncollectible because the creditor claim period expired, then the creditor may issue a 1099-C to the debtor (Estate) for the $250,000. If the Estate only has $50,000 in total assets, then they would have $50,000 in income. I would look to amended any tax files if that were the case. </div></div><br><div class="gmail_quote"><div dir="ltr" class="gmail_attr">On Tue, Jan 24, 2023 at 2:58 PM Jade Coppieters <<a href="mailto:jade@scarfflaw.com">jade@scarfflaw.com</a>> wrote:<br></div><blockquote class="gmail_quote" style="margin:0px 0px 0px 0.8ex;border-left:1px solid rgb(204,204,204);padding-left:1ex"><div class="msg-8267960601589739123">
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<p class="MsoNormal">If the creditor’s claim was not properly presented/filed, I would argue there is no debt from which income can result when it was “cancelled”. It’s hard to say it was even “cancelled”, since Wells Fargo simply failed to preserve their claim
by not following the probate claims procedure. If the Estate was not obligated to pay the debt, how can it owe income when the debt is cancelled?
<u></u><u></u></p>
<p class="MsoNormal"><u></u> <u></u></p>
<p class="MsoNormal">I would ignore the 1099. Wells Fargo likely filed it with the IRS, which is frustrating as I suppose it could lead to questions from the IRS when no 1041 is filed.
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<p class="MsoNormal"><b>J. M. Coppieters, Esq.<u></u><u></u></b></p>
<p class="MsoNormal"><span style="font-size:10pt">Phone: 206-236-1500<u></u><u></u></span></p>
<p class="MsoNormal"><span style="font-size:10pt">Fax: 206-905-5912<u></u><u></u></span></p>
<p class="MsoNormal"><span style="font-size:10pt"><u></u> <u></u></span></p>
<p class="MsoNormal"><a href="http://www.scarfflaw.com/" target="_blank"><span style="font-size:10pt;text-decoration:none"><img border="0" width="261" height="104" style="width: 2.7187in; height: 1.0833in;" id="m_-8267960601589739123Picture_x0020_2" src="cid:185e60e3bca5af44d2"></span></a><span style="font-size:10pt"><u></u><u></u></span></p>
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<p class="MsoNormal"><u></u> <u></u></p>
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<p class="MsoNormal"><b>From:</b> <a href="mailto:wsbapt-bounces@lists.wsbarppt.com" target="_blank">wsbapt-bounces@lists.wsbarppt.com</a> <<a href="mailto:wsbapt-bounces@lists.wsbarppt.com" target="_blank">wsbapt-bounces@lists.wsbarppt.com</a>>
<b>On Behalf Of </b>Inge Fordham<br>
<b>Sent:</b> Tuesday, January 24, 2023 2:12 PM<br>
<b>To:</b> WSBA Probate & Trust Listserv <<a href="mailto:WSBAPT@lists.wsbarppt.com" target="_blank">WSBAPT@lists.wsbarppt.com</a>><br>
<b>Subject:</b> Re: [WSBAPT] 1099-C Cancellation of Debt<u></u><u></u></p>
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<p class="MsoNormal"><u></u> <u></u></p>
<p class="MsoNormal">I have a similar situation. Please reply to the list.<u></u><u></u></p>
<p class="MsoNormal"><u></u> <u></u></p>
<p class="MsoNormal">Thank you!<u></u><u></u></p>
<p class="MsoNormal"><u></u> <u></u></p>
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<p class="MsoNormal" style="margin-bottom:3pt"><b><span style="font-size:13pt;font-family:Cambria,serif;color:rgb(32,56,100)">Inge A. Fordham | Attorney</span></b><span style="font-size:12pt"><u></u><u></u></span></p>
<p class="MsoNormal" style="margin-bottom:3pt"><span style="font-size:12pt;font-family:Cambria,serif;color:black">Fordham Law, PLLC</span><span style="font-size:12pt"><u></u><u></u></span></p>
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<p class="MsoNormal"><b><span style="font-size:12pt;color:black">From: </span></b><span style="font-size:12pt;color:black"><</span><a href="mailto:wsbapt-bounces@lists.wsbarppt.com" target="_blank"><span style="font-size:12pt">wsbapt-bounces@lists.wsbarppt.com</span></a><span style="font-size:12pt;color:black">>
on behalf of Brent Williams-Ruth <</span><a href="mailto:brent@williams-ruthlaw.com" target="_blank"><span style="font-size:12pt">brent@williams-ruthlaw.com</span></a><span style="font-size:12pt;color:black">><br>
<b>Reply-To: </b>WSBA Probate & Trust Listserv <</span><a href="mailto:WSBAPT@lists.wsbarppt.com" target="_blank"><span style="font-size:12pt">WSBAPT@lists.wsbarppt.com</span></a><span style="font-size:12pt;color:black">><br>
<b>Date: </b>Tuesday, January 24, 2023 at 2:11 PM<br>
<b>To: </b>WSBA Probate & Trust Listserv <</span><a href="mailto:WSBAPT@lists.wsbarppt.com" target="_blank"><span style="font-size:12pt">WSBAPT@lists.wsbarppt.com</span></a><span style="font-size:12pt;color:black">><br>
<b>Subject: </b>[WSBAPT] 1099-C Cancellation of Debt<u></u><u></u></span></p>
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<p class="MsoNormal"><u></u> <u></u></p>
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<p class="MsoNormal"><span style="font-family:Arial,sans-serif">Mighty Brain Trust - <u></u><u></u></span></p>
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<p class="MsoNormal"><span style="font-family:Arial,sans-serif"><u></u> <u></u></span></p>
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<p class="MsoNormal"><span style="font-family:Arial,sans-serif">Today I received a 1099-C for the cancellation of debt from a Wells Fargo credit card. <u></u><u></u></span></p>
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<p class="MsoNormal"><span style="font-family:Arial,sans-serif"><u></u> <u></u></span></p>
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<p class="MsoNormal"><span style="font-family:Arial,sans-serif">This debt was never presented as a creditor claim. The amount is $627.47. <u></u><u></u></span></p>
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<p class="MsoNormal"><span style="font-family:Arial,sans-serif"><u></u> <u></u></span></p>
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<p class="MsoNormal"><span style="font-family:Arial,sans-serif">The estate closed under regular process - Decl of Completion - on January 20, 2022. The creditor period expired on August 14, 2021. <u></u><u></u></span></p>
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<p class="MsoNormal"><span style="font-family:Arial,sans-serif">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. <u></u><u></u></span></p>
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<p class="MsoNormal"><span style="font-family:Arial,sans-serif">Thank you. <u></u><u></u></span></p>
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<p><b><span style="font-family:"Times New Roman",serif">Brent Williams-Ruth</span></b><span style="font-family:"Times New Roman",serif"> (pronouns: he/him)<br>
<i>Attorney-At-Law</i></span><u></u><u></u></p>
<p><b><span style="font-family:"Times New Roman",serif">Law Offices of Brent Williams-Ruth, </span></b><b><span style="font-size:7.5pt;font-family:"Times New Roman",serif">a division of BWR Consulting, PLLC</span></b><u></u><u></u></p>
<p><b><span style="font-family:"Times New Roman",serif">Physical Address: 500 S 336th Street, Suite 214; Federal Way, WA 98003</span></b><u></u><u></u></p>
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