- Mark as New
- Bookmark
- Subscribe
- Subscribe to RSS Feed
- Permalink
- Report Inappropriate Content
Business & farm
Note that @FMitchell70 is not the OP. They said theirs was a business loan, not personal.
Are you sure the fact that the former debtor was granted bankruptcy protection doesn't alter the usual requirement that they send them a 1099? The legal obligation to repay the loan would generally have ended as part of the bankruptcy, right? So I'd think it would have been at that point that the income would have been realized (though I'd expect no tax would be due on such income as part of a bankruptcy). I'd think the "writing off" by @FMitchell70 now would be a more unilateral affair — a recognition that the debt had already been extinguished (by the bankruptcy court) and a formal abandonment of any hope that the former debtor might still honor the debt voluntarily.
Granted, I'm neither a lawyer nor a tax pro, but that's what my lay understanding of the law and reasoning tell me.