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Will I receive a 1099-C personally for a business debt I personally guaranteed for my S-Corp?
Anonymous2 views3 answers
I own 50% of an s-corporation that is going out of business. A loan of $200 K is outstanding that my business partner and I both personally guaranteed. I negotiated a settlement with the bank to remove my personal guarantee from the loan and my business partner declared bankruptcy. Will the resulting 1099-C that the corporation receives also apply to me personally. The company is insolvent, but does my original personal guarantee mean that I will get 1099-c personally?
Forgiveness of the personal debt may be income to you, but whether it will be 1099 or other is not known from these facts.
Hire counsel TODAY as Dec 31 is the last day you may act.
I do not necessarily agree with Mr. Brinkmeier's answer. The 1099-C in question has not been issued, so it does not pay to speculate as to its form. If and when it does arrive, it can then be dealt with. If it is the corporation that receives it, and the corporation fits within one of the statutory exceptions to income, including insolvency, then the pass-through to you would of course be zero. If you do receive an individual 1099-C, then we should research it at that time to determine whether it was properly issued, and whether you could take advantage of the corporation's insolvency exception.
