Will Irs Form 13844 Bankruptcy 2024

Jim, we know that tons of people out there in the last several years have been through a short sale. They short sold their property for less than what they owe the bank, have been through a mortgage modification, where some of the principal debt has been forgiven, or have simply let their house go into foreclosure, where the bank, for innocence, didn't collect the loan from them. All of those people are subject to receiving a 1099 from the lender or the bank, and some of them are getting those 1099s these days. When the bank did a foreclosure, a loan modification, or a short sale, you may owe the consumer Mayo taxes on that debt that was forgiven. That's right, section 108 of the Internal Revenue Service code says that there are only two exceptions to forgiveness of debt: insolvency or bankruptcy. We know the banks were overwhelmed way back in the day about getting these 1099s out, but they can still do them even years later after you think it's all done and over with. There is a financial reason for the banks to do these 1099s because it creates a deduction, a loss on their books, which is good for their income taxes. But again, this passes this income tax debt on to the consumer. How many years after a foreclosure or short sale could the bank file a 1099 against somebody? That, I do not know, but it is when they feel like they can't collect it or they just write it off their books. So, in a typical foreclosure or short sale, the bank has forgiven $50,000, $100,000, $150,000, $200,000, or $300,000 worth of debt. That could create a huge tax liability for the former homeowner, and it is usually a shock to people...