Discussion:Debt Cancellation -- Cosigner for son's loan

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Discussion Forum Index --> Advanced Tax Questions --> Debt Cancellation -- Cosigner for son's loan


Discussion Forum Index --> Tax Questions --> Debt Cancellation -- Cosigner for son's loan

Wiles (talk|edits) said:

8 April 2010
I can't imagine this thread does not exist yet. I did a search and nothing came up.

I have a client that co-signed on his son's loan. His son made all the payments on the loan for a while. And then short-sold the home last year.

My client is receiving the 1099-C for the debt cancellation since she was the first name on the loan.

I believe this debt cancellation belongs 100% to the son since the facts and circumstances show that this was his loan. Is this correct?

I guess I will attach a statement to my client's return, and most likely get a CP-2000 anyway.

Kevinh5 (talk|edits) said:

8 April 2010
actually, it was both of their loans - cosigning makes you 100% responsible for the whole thing

thus if dad didn't pay, he has COD income, and it wasn't even his principal residence. OUCH

NOW, the procedural issue is that there was only one total debt. Both shouldn't be taxed on the entire thing.

HMMMMMM, how do you get the IRS to realize that?

Wiles (talk|edits) said:

9 April 2010
Exactly, they both do not claim 100%. Is it 50/50 or is based on whose loan it is?

Wiles (talk|edits) said:

9 April 2010
Ah hah! found a prior thread

Discussion:Debt_Forgiveness_for_a_Co-signer

Hmm... Appropriate allocation... How about 100% to son and 0% to my client. That seems appropriate.

Kevinh5 (talk|edits) said:

9 April 2010
wow, follow that CCA that RD1 found for you

TexCPA (talk|edits) said:

9 April 2010
Try Chief Council Advice 200023001

"I believe this debt cancellation belongs 100% to the son since the facts and circumstances show that this was his loan. Is this correct?" I would say yes since the Dad did not recieve any beneficial interest

It may be possible for the Loan company to re-issue the 1099-C.

"For this purpose, multiple debtors are presumed to be jointly and severally liable on an indebtedness in the absence of clear and convincing evidence to the contrary." Reg. 1.6050P-1.

TexCPA 22:53, 8 April 2010 (CDT)

TexCPA (talk|edits) said:

9 April 2010
Roy Dale is so smart, sorry I posted at the same time

:(~

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