Tuesday, August 16, 2011

How do you handle a 1099-C issued by a collection agency for debts resold?

A credit card debt was sold to a LLC and a 1099-C was issued using a FID number for the LLC. The amount on the 1099-C was settled in 2007 by the debt settlement company but the 1099-C was issued in 2008 for the full amount. The saving from the settlement included interest and fees which were not separated. Can 1099-C's be issued by a company without a FID number and can a purchased debt written off by the original lender as a loss and purchased by a collections company be taxed for the savings amount which included interest and fees? What is considered the true amount of the principle savings to be reported on the 1099-C as taxable?

No comments:

Post a Comment