Cancelled Debt of Decedent who died 6 years ago

[Tax Prep by Deb]

I have a client whose husband died six years ago. In 2013 she received in his name and social

security several loans that were cancelled amounting to $15,111. There was never a trust return filed because other than the house they owned together he had no other assets, so no need for anything but a final joint return for the year of death.

Now six years later the 1099-C's show up. How do I handle this?

Any help would be greatly appreciated!

Thanks in advance!

[kcjenkins]

Well, since it's 2013 income, she's not able to file a joint return with it. Why not file a 1040 for him as single, deceased, and report the income as non-taxable due to insolvency? Or just ignore it, since there is no way the IRS is going to be able to find him. Any mail received from IRS to him should be returned to the PO unopened, marked "Deceased".

[Lion EA]

He can't file a 2013 return. He was dead the full year!

[Pacun]

File form 1040 and 982 as insolvent.

[Pacun]

Since there is funds to pay for the debt, (the house) you might have difficulties using 982.

[kcjenkins]

Since there is funds to pay for the debt, (the house) you might have difficulties using 982.

NOPE. He died 6 yrs ago, at which time he did not owe this, and his share of the house was inherited by spouse. So in 2013, he has the income, but no assets.

Still, I favor my second option, file nothing.

[michaelmars]

FILE NOTHING ITS A DEAD ISSUE

[Jack from Ohio]

Since the 1099-C does not have her SS# on it, do NOTHING. Let the IRS collect it from him if they choose. She is not liable.

[MAMalody]

I go with the do nothing.

[Catherine]

If there is ever a query, send the IRS the decedent's cemetery's address. Include the plot number...

[Tax Prep by Deb]

Thanks everyone! I'm going with your advice and my first instinct. We will address this issue when it becomes an issue.

[Terry D EA]

If there is ever a query, send the IRS the decedent's cemetery's address. Include the plot number...

That would be too funny to see an IRS agent try to visit the address. Make it more interest and use "Lot Nbr" instead of plot number. This is almost as insane as a debt collector trying to collect a debt from someone who is incarcerated. No kidding, unfortunately we have a family member who has done some time that once lived with us. Yep, the debt collector who called me asked for the jail address after I explained where the person was. Just because I am the inquisitive type, I asked him what methods he was going to use to collect the debt and asked him to humor me; his response was you never know unless you try.