Cancellation of Debt / IRA

[Oh Baby!]

Are amounts held in an IRA account included when calculating whether the taxpayer was insolvent before and after the debt was canceled?

[Janitor Bob]

Is amounts held in an IRA account included when calculating whether the taxpayer was insolvent before and after the debt was canceled?

I would think so...Since concieveably, they could withdraw from or borrow against IRA to pay off debt.

[Oh Baby!]

I was actually thinking that not, becuase I beleive that they are protected in bankruptcy filings.

[Janitor Bob]

I was actually thinking that not, becuase I beleive that they are protected in bankruptcy filings.

I agree...If Bankruptcy....My opinion was assuming taxpayer had not filed bankruptcy.

[joanmcq]

Bankruptcy and insolvent are not the same things. If taxpayer is in bankruptcy, no 1099-C income. If insolvent (and I think retirment accounts are included) then no income.