[DAH]

We filed chapter 7 and surrendered our home. How does this affect our taxes?

[XTC832]

When you filed for bankruptcy, you may or may not have realized that you created an "estate." This separate estate, which is supervised by the trustee, takes control of the liquidated assets. Therefore, the trustee files an estate return and you would file your individual return. Keep in mind, debt forgiven is considered income whereas discharged debts through bankrutpcy are not.

The question concerns what taxes, if any, the estate must pay and what taxes, if any, you must pay. Any income produced from the sale of the home, or other property generally is reportable on the estate's return. However, there may be taxable amounts for which you are responsible. Essentially, the taxable information can't overlap. I'm not sure if there are other factors involved, but you really should speak to your attorney and see if you can verify the estate's tax position. You also might want to take at a look at IRS Publication 908. It has detailed info. Concerning this issue. Hope this helps you somewhat. Take care!