another one of my CtC Favorites...

[Gregg]

oopps, looks like Smithers made a little boo boo...looks like he lost his house already, and was $48K upside down..so he is shocked to find out that the $48K GMAC forgave (and what nice guys they were to do that) is in fact taxable income, even under CtC whacko rules...that is, if GMAC has a federal connection.....

Has anyone been faced with, or have a humble OPINION as to, how to address a Cancellation of Debt (form 1099-C). I did a short sale of my house last year and just received a form 1099-C Cancellation of Debt from the lender GMAC Mortgage.

Of course, I disagree with the amount $48,000 but that I can take up with GMAC.

I am wondering, is GMAC a federally chartered institution and if so, is the $48K "income" in that case? The IRS of course calls it income but then again, we know they call everything "income".

Someone please inform this genius that yes, GMAC is a federally chartered bank, it's parent company just took $20 Billion in bailout loans from the federal government and 7% of Gm vehichles are in fact sold to the federal government...so theres a slight connection, and you owe the taxes on the $48K. And if you've already lost your house, don't you think it might be time to get responsible about your life, I cetainly hope you're dragging a wife and kids donw the kool aid path with you.

[Famspear]

User "NOT!Frivilous" has responded to "esmithers1" by running headlong down a rabbit trail over the requirements for filing a Form 1099-C.

Some primary issues that should be addressed by esmithers1 are (1) whether he actually has section 61(a)(12) income from the discharge of indebtedness, and (2), if so, whether the income can be excluded from gross income by virtue of one of the provisions of section 108.

Whether the lender was required to issue a Form 1099-C or not, the central reality is that the lender did so. Maybe esmithers1 can convince the lender that the lender should amend the 1099-C to show zero income, but that's unlikely to happen (and the Form 1099-C is probably correct, anyway). And even if the lender were to "zero out" the 1099, that would not change the requirement that esmithers1 report all the income he is required to report (to be a bit tautological about the whole thing, here).

"NOT!Frivilous" quotes from some instructions for Form 1099-C, and then says:

do any of the TERMS above apply to you, or does the use of any terms allow you to fall under one or more of any of the exceptions?

http://www.losthorizons.com/phpBB/viewtopic.php?t=1378

If the question is being addressed to esmithers1 then, of course, the question is misdirected. The issue is not whether esmithers1 comes under one of the exceptions to the requirements for filing a Form 1099-C. The filing requirement is imposed on the lender, not on esmithers1.

And whether there is a filing requirement or not, the fact is that the 1099 was filed. So, get off the rabbit trail, "NOT!Frivilous," and concentrate on the problem....

[Judge Roy Bean]

....
Someone please inform this genius that yes, GMAC is a federally chartered bank, it's parent company just took $20 Billion in bailout loans from the federal government and 7% of Gm vehichles are in fact sold to the federal government...so theres a slight connection, and you owe the taxes on the $48K. And if you've already lost your house, don't you think it might be time to get responsible about your life, I cetainly hope you're dragging a wife and kids donw the kool aid path with you.

Actually GMAC's mortgage operations are no longer connected to GM, nor are they a federally chartered bank.

What this buffoon also doesn't realize is that for mortgages, forgiven debt is currently not a tax liability - for now, at least.

[Gregg]

....
Someone please inform this genius that yes, GMAC is a federally chartered bank, it's parent company just took $20 Billion in bailout loans from the federal government and 7% of Gm vehichles are in fact sold to the federal government...so theres a slight connection, and you owe the taxes on the $48K. And if you've already lost your house, don't you think it might be time to get responsible about your life, I cetainly hope you're dragging a wife and kids donw the kool aid path with you.

Actually GMAC's mortgage operations are no longer connected to GM, nor are they a federally chartered bank.

What this buffoon also doesn't realize is that for mortgages, forgiven debt is currently not a tax liability - for now, at least.

Yes, you;re right, GM no longer owns most of GMAC, but Cerebus Capitol (the guys who own GMAC and strangely enough, Chrysler) is still taking bailout money...I did not know GMAC was not federally chartered as a bank, I thought I remembered reading that they had done that, guess I was wrong. I also did not know that a forgiven mortgage debt is not considered taxable....that was totally out in left field to me,,,,you learn something every day.

[.]

Actually GMAC's mortgage operations are no longer connected to GM, nor are they a federally chartered bank.

The first part is true, the second not.

GMAC Residential Holding Corp. announced today that its wholly owned subsidiary, GMAC Bank, a federal savings bank, has received its charter from the Office of Thrift Supervision (OTS).

<snip>

Along with the deposit offerings, GMAC Bank intends to originate and purchase residential mortgage loans, as well as home equity loans and lines of credit.

GMAC Bank will not provide any funding for GMAC's auto finance business and will not make loans to dealers for wholesale auto financing or loans to consumers for retail auto financing.

http://media.gmacfs.com/index.php?s=43&item=178

Getting the federal bank charter enabled GMAC to get TARP funds to prop up their horrendous mortgage portfolio.

GM's (ongoing) bailout was directly to them and not part of TARP. The day after GM got their money, they started new dealer incentives.

The funny (or sad) thing about the sale of GMAC is that GM is not just getting direct bailout money, they're also getting paid over 3 years for the sale of their interest in GMAC by Cerberus (which is getting indirect bailout money by virtue of the fact they they would otherwise have to put capital into Chrysler) and by Citibank (they bought part of the 51% of GMAC that GM sold) which is also getting direct bailouts via TARP and federal loan guarantees.

totally out in left field

It was until the geniuses in Congress decided to pass the Mortgage Forgiveness Debt Relief Act of 2007 in December, '07.

[Gregg]

Fresh meat!

Hello Everyone:

I am a virgin CTC filer and plan on filing the proper legal way this year for the 2008 tax season.

I do not have a scratch on my record, and I have never had any dealings with the IRS in the past.

Is there anything one can do from a legal point BEFORE filing a return that will set the IRS up for falt? Or more specifically, a way to ensure they do what is legally correct, by way of filing my return and not naming it friv.

Edmond Dantes

Well, Ed, here's what you do. Read CtC enough times that you memorize most of it, then amke sure NOT to use any of the "tricks" that are in it. Otherwise, you're gonna get in a little trouble or maybe a lot of trouble.

Good luck!

[.]

I do not have a scratch on my record

Dear Ed,

Kiss those days good-bye.

Get out your checkbook and write a check payable to the "U.S. Treasury" for $5,000 for the frivolous filing penalty. If you're married and bamboozled your wife into signing a joint frivolous return, be prepared to make it $10K.

Then, if you got a refund, look forward to paying the penalties and interest that will be assessed, in addition to the refunded tax that will have to be repaid.

Then, if you are really lucky and you are selected for criminal prosecution, get your checkbook out again and write a really, really, really big check to retain your criminal defense attorney. It will be many, many, many times the amount of any refund you got.

It also won't be the last check you write to him.

Then, after all is said and done be prepared to have him tell you how sorry he is that you were convicted and sentenced to many years in federal prison. He'll also tell you that you'll have to pay the balance of his bill or he'll foreclose on his lien on your double-wide and that you should probably get someone else to handle your appeal.

He won't tell you that your criminal appeal has zero chance of success. And that you still owe the tax, penalty and interest regardless of the criminal disposition.

Don't look to the CrackHeads for support, they will have long ago disowned you. You didn't use exactly the right mumbo-jumbo words, which change depending upon their latest legal defeat.

See? CtC is all sweetness and light. Until it isn't and crashes and burns, as it has for everyone who has ever been stupid enough to have taken a turn around the legal block with this total nonsense.

Love,

An admirer of idiots who insist on sticking their necks out expecting something other than the usual result, but only because they have a very high humor value.

[grixit]

Years ago i saw a movie about a prostitute in New York. There was one scene in which another prostitute mugged her. Bruised and battered, she found a phone booth and called her pimp.

Prost: I'm hurt, i need help.

Pimp: Sure, baby, Sweet's here, come on home.

Prost: But Sweet, i'm really hurt, i can't walk!

Pimp: Then you got to crawl, baby.

[Pimp hangs up.]

At the end of the movie, she decides she wants out. But as she gets on the bus to return to the small town she came from, Sweet gives her a smirk and says she'll be back.

It suddenly occurs to me that PH is actually less supportive of his source of income than Mr. Sweet was.

[Judge Roy Bean]

.....
The first part is true, the second not.

Indeed. They dropped off my radar late last year when their abusive foreclosure activity dwindled.

[Doktor Avalanche]

Not surprising since the typical hookers-pimp combo does more, contributes more to society and business in general than the PH-CtC follwer combo.

I trust this pimp far, far more than I would ever trust PH or some of his followers:

Bootsy Collins called and he'd like his glasses back.

[wserra]

Hey! Leave Bootsy alone!

I challenge anyone to click here, pump up the volume and remain in your chair.

And then break out "Standin' in the Shadows of Motown" and go to "Do you Love Me?" Hell, watch the whole thing again. There'll never be another band like the Funk Brothers.