Chapter 12 farm bankruptcy helps family farmers to keep their farms. It allows family farmers to reorganize their finances and operations. Chapter 12 was originally enacted by Congress in 1986, and was made permanent in 2005. It helps the farmer and the banker to sit down and work out alternatives for debt repayment. But according to [...]
Tax Debt
Bankruptcy is not always the best way to get rid of federal tax debt. Given enough time, the tax may just go away. The IRS is given 10 years from the date the tax is assessed to collect in most cases by 26 USC §6502, a section of the Internal Revenue Code. The date after [...]
Credit card debt is frequently discharged in bankruptcy. Taxes can be paid with a credit card. State and Federal governments accept and even encourage such payment. However, a credit card debt incurred to pay tax is probably not dischargeable. There are at least two important reasons why credit card convenience may result in non-dischargeable debt. [...]
According to the 4th Circuit Court of Appeals, if you fail to tell your state taxing authorities after the IRS adjusts your taxable income, it may prevent you from discharging your state taxes in bankruptcy. Most states with personal income taxes base their determination of taxable income on federal taxable income, subject to some additions [...]
Short Sales, home loan write-downs and foreclosure can all result in cancellation or forgiveness of debt for the borrower. Debt cancellation can result in taxable income to the borrower. There are many debt cancellation tax articles published on Bankruptcy Law Network. However, there are several ways to exclude debt cancellation from taxable income. Congress has [...]
With the start of a new year, and the deadline for filing tax returns just around the corner, W-2s and 1099s are beginning to show up in the mailbox. This year, a new type of 1099 may show up unexpectedly. If any debts were cancelled last year, banks and other financial institutions are required to [...]
