1099C question

If you had ordinary and necessary expenses for your cash-based business in a prior year, they were already deducted (or should have been) in that year, therefore you cannot deduct them a second time in a subsequent year.

Did you take the lifetime learning credit, tuition and fees deduction, or a deduction on Schedule A or C back then? You should have.

Sorry. This sounds like line 21 Other Income. There might be a law that if debt occurs because of disability then it can be discharged. Conceptually the

1099-C is like welfare income, and welfare is not taxable. But I could not find such a law.

Note that 1099-C income is not taxable if you are insolvent. If you enter bankruptcy proceedings then ensure that they discharge this debt.

We were told we could not take the deduction in real time only after the loans were paid back. Regardless if we had taken them in real time there would have been a loss carry forward.

"Like welfare" makes some sense but I doubt if the IRS would be of a similar mind.

Actually we were forced to file bankruptcy due to failure of insurance to pay claims. Eventually collected the insurance which was paid directly to the medical providers. (or so we've been told). I understand and appreciate the information and would likely not have had a problem if the

1099C had been issued in a timely manner.

We're on a (somewhat) even keel now, far from rich by any measure but not quite destitute. Only income is from Social Security (husband wife befits). If the deduction is not allowed we *will* face a hardship trying to pay the tax.

Told by who? That advice does not sound correct to me.

There is no carry forward of the education deduction or credit. You would have got a bigger refund.

First thanks for the input.

The information came from the IRS when they did an audit on previous returns.

It did not matter as there were sufficient other deductions that the issue was not one that needed to be addressed much less contested at the time.

Bigger refund of/on what? Being suddenly disabled there was no income much less a taxable income. Disability income came later (much later but that's another tail of woe) but since the premiums were paid with after-tax income the disability 'income' was not taxable.

My question/concern was: if, as a business expense, the expense could/should/might be carried forward. Especially in that the holder of the loan took near a decade to properly process the paperwork.

Understand I'm not trying to be contrary as I'm basically trying to understand how the process works (and doesn't work) with a diminishing hope there is some way to get relief from the surprise tax libility.

Since I'm over 67 my income is from SSA. Does that have any impact?

Someone suggested income averaging. Is that a realistic option?