Legal Question in Bankruptcy in Virginia

forgiveness of debt and income taxes

I filed chapter 7 in VA in 1997 and included the home I then owned. It was discharged early 1998. I have received an income tax bill for 1998 raising my reported income by the balance due on the mortgage at the time of bankruptcy (68k) resulting in a tax bill of $30k! It involves "forgiveness of debt" or something. Is that applicable if the debt was included in the bankruptcy?

Thank you!


Asked on 4/02/00, 12:38 pm

1 Answer from Attorneys
Daniel Press Chung & Press, P.C.

Re: forgiveness of debt and income taxes

The bank may have sent a 1099, but that does not mean it is in fact taxable. If the indebtedness was discharged in the bankruptcy, you owe no taxes for it.

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Answered on 4/17/00, 1:26 am


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