Join Early Retirement Today
Reply
 
Thread Tools Display Modes
forgiving debt
Old 12-02-2014, 08:25 AM   #1
Thinks s/he gets paid by the post
 
Join Date: Nov 2011
Posts: 3,876
forgiving debt

If I as lender forgive a debt, say $1000 plus $50 of interest, where do I record that when filing income taxes? As a capital loss of $1000 on Sched D? Interest as -$50 on Sched B? Online references have instructions for debtors but I have not found them for lenders.
GrayHare is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 12-02-2014, 08:37 AM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Dash man's Avatar
 
Join Date: Mar 2013
Location: Limerick
Posts: 5,637
This might help: http://www.nolo.com/legal-encycloped...ess-debts.html


Sent from my iPhone using Early Retirement Forum
Dash man is offline   Reply With Quote
Old 12-02-2014, 09:18 AM   #3
Moderator
braumeister's Avatar
 
Join Date: Feb 2010
Location: Flyover country
Posts: 25,198
If you forgive the debt, I think you turn it into a gift.

One of the rules for deducting a worthless debt is to show your good faith efforts to collect it.
braumeister is offline   Reply With Quote
Old 12-02-2014, 10:35 AM   #4
Full time employment: Posting here.
 
Join Date: Sep 2012
Location: San Jose
Posts: 607
I remember back when I had to do a short sale on my house, and the lender wrote off part of the debt, IRS rules said forgiven debt is treated as taxable income to the debtor, and I got a 1099 for the ~ $40k that was written off. So 1099'ing the debtor might be a requirement.

If this were me and it were "only" $1000, I'd probably avoid the hassle of dealing with the paperwork, and 1099'ing the recipient, since the tax savings on a $1000 deduction/loss isn't going to be much anyway.

Unless the debtor really pissed me off and was a deadbeat, in which case I probably would 1099 him just to spite him.
LoneAspen is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Law school debt (check), debt paid down (check), retirement (...) WhatsinaName Hi, I am... 7 08-13-2014 02:13 AM
Secured debt (HELOC) vs Unsecured debt (credit card) Sue J FIRE and Money 6 03-07-2007 10:02 PM
Good Debt vs Bad Debt Tommy_Dolitte Young Dreamers 7 09-13-2004 09:37 PM
mortgage versus debt free? dory36 FIRE and Money 20 06-01-2003 04:11 PM
Paying off Debt vs. 401(k) Contributions BigMoneyJim FIRE and Money 4 02-10-2003 10:06 AM

» Quick Links

 
All times are GMT -6. The time now is 04:42 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.