Cancelled Debt

[cpabsd]

Spouse passed away with credit card debt. The credit cards were only in his name. 1099-C's have been issued in his SSN. He passed away on 1/11/09 but the 1099's were issued for 2010. Can these be ignored?

Minor complication is that one of the cards issued the 1099-c in the name of the estate with the SSN of the spouse. She was not listed on the card. Can I put it on line 21 and subtract out without drawing any red flags from IRS? What other recommendations do you have? The credit card company was wrong to issue in her SSN with the facts that I have been given.

[joanmcq]

Was there an estate of any kind? Is not the estate responsible for the payments of the debts of the deceased?

[cpabsd]

There was no estate - everything went to spouse and children under age 18

[Pacun]

I thought estate meant "whatever was yours at the time of death". My only property I have is a bike and that's my estate if I die tonight.

"there was no estate" seems to be the wrong answer.

The gross estate of an individual includes the fair market value of all property owned at the date of death,

whether or not in actual possession of the decedent. This includes any accrued interest in property or income

owed to the decedent at death, as well as any loans due the decedent.

The gross estate is defined broadly to include the following items as well:

 Life insurance proceeds if the policy is (1) payable to the estate or (2) the decedent had

significant incidents of ownership at death (i.e., a power to change the beneficiary, a power to

borrow against the policy, etc.).

 Life insurance proceeds (full face value) of a policy that the taxpayer transferred to another person

within three years of death.

 Any property transferred within three years of death in which the taxpayer had a reversionary interest.

 Gift taxes paid on any gifts made by the decedent within three years of death.

 Any property that the decedent had a general power of appointment over.

 One half of jointly-owned property with a spouse, including community property.

 Value of jointly-held property with a non-spouse (as reduced by the percentage of total cost

contributed by the non-spouse co-owner).

 Accrued interest and declared dividends (even though not received

[jainen]

>>She was not listed on the card.<<

The executor and the heirs are PERSONALLy responsible for debts to the extent of assets distributed, so the 1099C was proper. Even if there is no probate estate, the executor is required to post public notice and invite known creditors to make claims. In my opinion, she should either pay off the credit card company or report the cancelled debt on her own return. There is no statutory authority to use Line 21 the way you suggest.