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The Form 1099-C is probably not the whole story. Clients with properties lost to foreclosure, sold in short sales, and who have had debts restructured have complicated tax issues that impact both tax planning and reporting. IRC Sec. 108 says that income from forgiveness of indebtedness is taxable, but it offers a number of exceptions to that rule. This course will deal with handling such transactions, including working with clients who are considering debt settlement options and those for whom the transaction is completed before the CPA becomes involved. Participants will learn how to reduce negative tax outcomes by applying the statutory exceptions to income recognition.

Objectives

Participants will be able to:

  • Distinguish between debt treated as proceeds of sale and debt treated as cancelled
  • Report and classify gain and loss on foreclosure
  • Apply exceptions to avoid cancellation of debt income
  • Understand the exclusions from COD income, including required tax attribute reductions
  • Rebut the presumptions of correctness for amounts reported on Form 1099-C
  • Understand special rules that apply to debt forgiveness in partnerships and S corporations

Highlights

  • Cancellation of indebtedness income
  • Classification and tax treatment of recognized gains and losses from cancellation of debt
  • Calculation of taxable income from foreclosure
  • Short sales of real estate, including personal residences, rental properties, and commercial properties
  • COD income recognition exceptions for lost deductions and contributions to capital
  • COD income exclusions
  • Information reporting forms: Form 1099-C and Form 1099-A

Who Will Benefit

Experienced tax practitioners who advise clients in financial restructuring, or reorganization in bankruptcy, and those who want to expand their services in this specialized area of tax planning and compliance.

Credits

Category Amount
Tax 4.00