Hi,

My wife and I recently walked away from a condo that was negative cash cow.
We owed 230k. The lender has issued us 1099c in our names. I have also opened up a pension Fund with it's own EIN# so that the 1099c would go into this trust. How can I get the lender to change our SSN# on the 1099c to the recorded EIN that the IRS provided me. I have wriiten to the lender and they say it cannot be changed.



Kimo

Hello Kimo:

Why don't you walk fully through the front door... Tell us what you're trying to do. There may be other ways to skin that cat. Why did you use an EIN instead of your SS? Are you trying to protect property from seizure? Is this a tax issue? Are you being sued? Don't tell me the lender is doing nothing.

Gimme something to work with here.

excon

I'm confused. A bit of research indicates a 1099C is issued when a debt is cancelled as a result of a settlement because the cancelled amount represent taxable income.

So you walked away from the Condo owing $230K and the lender arrived at a settlement with you. The loan was in your name, correct? You gave your SSN when you signed for the loan, correct? Why would you think it would be legal to transfer this to another entity? Smells of tax fraud to me.

What you might have done, is sold the condo to another entity then have that entity default on the loan used to pay off the other loan. EVen that seems shady.

Well thanks for both of your responses. Basically, my wife and I could not afford to keep paying a negative cash flow on a condo that was eating all my cash. I purchased the property and paid on it in good standings for 1 yr after. I re-evaluated my families situation and found we could not hold on to this property. We had this property on the market for another yr without 1 person seeing the property. The real estate agents were always saying they could sell it. No dice! Anyway's, to make this story short.

I ran into a person that is a tax accountant. He mention to us that getting a EIN, Open up a Trust and move the property into by recording. We would not be paying taxes on such a large debt that would finacially reuin my families future. Now, I'm looking at it both ways here. I never in my life stuck any financial institution with a bill. I pay off all my debts. But you must know this is a breaker for a middle class family. I only make $70K a yr.

How in the world can I pay the IRS over $160K for fair market price based on taxes on $230 FMV. Even the lender would not work with us. The first thing they said when we knew we could not hold on to it was to let it go in foreclosure or deed it back to us. Myself along witg my real estage agent was shocked. No program to work with a good paying customer. No customer service. What do you expect? If you can help then provide info. No criticle statements. I'm trying to do the right thing with no way out. I'm just trying to see what is my options.

Hello again, kimo:

There are still several large holes. In order to help, they need to be filled in.

You don't pay tax on debt. You pay tax on income. I don't know who told you would owe the IRS over $160K based on your mortgage, but they don't know what they're talking about.

I get that you want to deal straight with your creditors. Great. We'll help. But, we must know ALL the details regarding this transaction. Who told you what, and what did you do about it. From what I can ascertain, you're in serious trouble. I'm not going to be critical, but we need to know ALL the facts.

excon

Hi,

I meant to say income. Because the 1099c reflects me and my wife receiving a capital gains. When really we lost all around.

Esentially, the "bottom line" is that the 1099c is all set up to be issued to us as an individual and isues to our SSN, and that would result in about $120k on up. Of tax to me.

When trying to sell the property that would not sell. I realize that I can place this into a property trust and have the 1099c that is owned by the trust to be issued. It has already been recorded. The lender already sent us the 1099c and I need to have the 1099c reflect the EIN# against the trust corrected. Hopefully that make is clear.

First, The tax accountant was correct, but you may not have understood him properly. You could have sold the property to a trust or company. If you bought the property as an investment you could use the losses to offest your income. If its was running at a loss like you say, you might have been able to offset a significant amount of tax.

Allowing the lendor to foreclose was a big mistake. What happens in a foreclosue is the lender sells the property for whatever they can get, then goes after you for the balance.

The 1099c (excon pay attention ;)) appears to be issued when a portion of debt is forgiven as part of a settlement. Basically, it says, I'm giving this person x dollars to cancel this debt. So the IRS is saying that amount is taxable. Obviously this increases your taxable income and, therefore your tax liability. But its certainly better then having to pay the whole amount. For its end, the lender gets a tax writeoff.

But the point is YOU were the borrower. YOU are getting the settlement. Therefore the 1099C has to be issued to YOU. There is no way around it.

Hello again, Kimo:

No Sir. I NEED the details of the transaction. Without it, I'm blind! What did you pay for the condo? When did you buy it? How much was your mortgage? How much down payment did you make? What interest rate are you paying. What ELSE did you sell in the year you are liable for $160K to cause that kind of capital gains tax?

I'm sorry, Sir. You don't pay capital gains tax on a property UNTIL you sell it. You DIDN'T sell the condo. To owe $160K in capital gains tax, means you sold some OTHER property that netted you with a CAPITAL GAIN of between $500,000 and a $1,000,000. Where did that gain go to??

Sir, after three attempts to get information out of you, and all I get is this, leads me to conclude that you have no idea about the legal maneuvers you have gotten yourself involved in. I suggest you see an attorney.

excon