레이블이 How to Discharge School Loans인 게시물을 표시합니다. 모든 게시물 표시
레이블이 How to Discharge School Loans인 게시물을 표시합니다. 모든 게시물 표시

2013년 11월 30일 토요일

About 'student loan indebtedness'|College graduates struggle to repay student loans







About 'student loan indebtedness'|College graduates struggle to repay student loans








You               must               report               the               cancellation               of               personal               debt               on               your               income               tax               return.

When               an               owed               debt               by               either               a               person               or               business               entity               is               cancelled               or               forgiven,               some               amount               of               taxable               debt               income               may               be               generated               since               the               benefit               of               the               amount               borrowed               in               the               past               is               no               longer               associated               with               the               burden               of               repayment               now               or               in               the               future.

Cancellation               of               debt               (COD)               is               reported               to               both               taxpayer               and               the               tax               authority               on               IRS               Form               1099-C.

This               information               is               transferred,               for               personal               debt,               to               Line               21               on               IRS               Form               1040.

Business               debt,               depending               on               the               nature               of               the               business,               is               transferred               to               IRS               Form               1040               Schedules               C,               E               or               F.

Two               general               types               of               indebtedness               
               The               two               general               types               of               indebtedness;               recourse               and               non-recourse               debt               are               distinguished               by               personal               liability.

A               borrower               is               personally               liable               for               recourse               debt;               they               do               not               alternatively               have               the               same               personal               obligation               in               the               case               of               non-recourse               debt.

Taxable               income               arising               from               the               cancellation               of               recourse               debt               can               occur               whether               or               not               property               is               returned               or               surrendered.

Surrendering               property               in               full               or               partial               payment               of               a               recourse               debt               is               actually               treated               as               a               "sale"               of               that               property               at               "fair               market               value".

Debt               income               is               usually               "generated"               when               the               cancelled               or               forgiven               amount               of               money               owed               exceeds               the               value               of               the               property               surrendered               in               payment               of               the               outstanding               debt.

Thus,               repossession               and               foreclosure               are               both               treated               as               a               sale               or               exchange               of               property               and               the               rules               of               gain               or               loss               consequently               apply.

Similarly,               in               the               case               of               recourse               debt               secured               by               abandoned               property,               ordinary               taxable               income               can               also               be               realized               if               the               debt               is               cancelled.

Alternatively,               any               money               realized               from               the               sale               of               property               to               satisfy               non-recourse               debt               is               considered               the               amount               of               debt               cancelled;               there               is               no               excess               amount               over               fair               market               value               recorded.
               There               are               exceptions!


               There               are               several               exceptions               where               the               reporting               of               taxable               income               from               cancellation               of               debt               does               not               apply.

There               is               no               taxable               income               derived               from               situations               where               the               cancellation               of               an               outstanding               debt               is               intended               as               a               gift               or               represents               deductible               debt.

In               the               latter               case,               there               is               no               perceived               debt               income               if               the               paid               debt               would               have               been               a               deductible               tax               item,               such               as               a               business               expense,               if               it               had               been               a               non-recourse               loan               (discussed               above),               or               some               student               loans               with               special               contract               provisions               regarding               the               performance               of               services               in               lieu               of               full               payment.

Similarly,               cancellation               of               debt               in               a               bankruptcy               proceeding,               qualified               farm               or               real               property               business               indebtedness,               or               specific               situations               where               an               individual               proves               their               insolvency               immediately               before               discharge               of               the               cancellation               of               debt               do               not               generate               taxable               debt               income.
               Two               information               documents               are               used               when               reporting               cancellation               of               debt;               the               IRS               Form               1099-A,               Acquisition               or               Abandonment               of               Secured               Property               and               the               IRS               Form               1099-C,               Cancellation               of               Debt.

The               proper               reporting               of               either               of               these               documents               on               an               income               tax               return               is               best               left               to               an               experienced               tax               preparer.

Do               NOT               overlook               COD               events               when               filing               your               return.

For               more               information,               visit               the               IRS               website,               IRS.gov.
               References               
               Internal               Revenue               Service,               www.irs.gov/formspubs/index.html,               Forms               and               Publications






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