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  • 1.  Collection Statute Expiration Date

    Bronze Most Valuable Member
    Posted 02-17-2023 10:24 AM

    A client has had the Collection statute expire on an outstanding assessment. Is it possible that this is not cancellation of debt income? 



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    Patricia Giunta
    JTS Associates CPA's P.C.
    Westbury NY
    patricia.giunta@jtshulman.com
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  • 2.  RE: Collection Statute Expiration Date

    Posted 02-18-2023 12:45 AM
    IRC Sec 108 does not appear to include any provision whereby a tax liability would not give rise to forgiveness of debt, however the IRS will rarely allow the  collection statute of limitations to expire, except if they find that there is no potential of recovery from any assets or source of funds,   In that regard , possibly consider the exclusion of the reporting of forgiveness of debt income due to insolvency should you find that that would apply. There are schedules to calculate insolvency as it pertains to IRC Sec 108.





  • 3.  RE: Collection Statute Expiration Date

    Bronze Most Valuable Member
    Posted 02-18-2023 09:13 AM

    Thank you Howard! 



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    Patricia Giunta
    JTS Associates CPA's P.C.
    Westbury NY
    patricia.giunta@jtshulman.com
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  • 4.  RE: Collection Statute Expiration Date

    Posted 02-18-2023 08:58 AM

    If it is an IRS assessment, I don't think you will need to pick this up as cancelled debt income. An IRS assessment is a claim of taxes due which can be argue against. I wouldn't considered this as a debt which was settle. also, I have never seen the service issuing 1099 for this.



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    Nurys Santos CPA
    EDWARD D. HEBEN, CPA
    Thornwood NY
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  • 5.  RE: Collection Statute Expiration Date

    Silver Most Valuable Member
    Posted 02-18-2023 12:46 PM

    I have never seen the IRS assert CODI.  Let me take a quick look.  I assume no other exception exists – there are many under 108. As the collection statute is 10 years- a strong position is that the IRS walked away from this year's ago and the statute for COD is closed.  Perhaps that is the way they look at it.

     

    Very truly yours,

     

    ROBERT S. BARNETT

     

     

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