For tax year 2010, tax returns are due April 18, 2011, not the normal day of April 15. Why? April 15, 2011 falls on the Washington D.C. holiday of Emancipation Day. Since Emancipation Day falls on April 15 and it is an official District of Columbia holiday, taxpayers have until April 18, 2011 to file their tax return, pay their taxes, or file an extension. (D.C. holidays are given the same credence as Federal holidays). (more…)
Archive for the ‘Chapter 7 Bankruptcy’ Category
Bankruptcy Wrinkle With Tax Returns Being Due April 18, 2011
Tuesday, March 29th, 2011
Can I Keep Vacation Property In Chapter 7 Bankruptcy?
Thursday, March 17th, 2011Question:
I own a vacation property, not a timeshare; if I file chapter 7 bankruptcy, will I be able to keep that vacation property?
Answer:
For such a generally worded question, my answer will be, generally no. There are two issues related to vacation properties and bankruptcy, (1) equity, and (2) expense. As an asset, if the vacation property has equity—meaning the property is worth more than what is owed—and if there is no exemption to protect that equity, the bankruptcy trustee will likely sell the property. Exemptions are laws that allow you to keep certain assets or equity in assets notwithstanding the fact that you are filing bankruptcy. However, if you can exempt the equity, then the trustee cannot sell the property. (more…)
2nd Mortgage Discharged in Bankruptcy, Do I Pay Income Tax?
Friday, March 4th, 2011Question:
I received a Chapter 7 bankruptcy discharge in March 2009 in which I surrendered my primary residence which had a 1st and 2nd mortgage. I ended up modifying my 1st mortgage through the HAMP program, which I am now more than 90 days current on my payments. The 2nd mortgage holder has sent me a letter asking to sign a Dodd-Frank form so I can be eligible to extinguish the debt, which could have tax consequences. I’m not sure if I should sign and send this form back, which I could pay ordinary income tax on the “forgiven” debt, or not send it back since the debt is discharged. This is so confusing! (more…)
What Tax Returns Must Be Prepared Prior to Filing Chapter 7 Bankruptcy?
Monday, December 13th, 2010Question:
My CPA wants $15,000 in advance to prepare my 2007, 2008 and 2009 tax returns. I had an S Corp for my business and 5 LLC’s for Real Estate investments. All are now closed except 1 LLC. I don’t have the $15K and need to file Chapter 7. Business debt is $596K and personal debt is 94K. I have read in books and on web sites that tax returns need to be completed, however Rule 4002(b)(3) states “Provide most recent year return or a written statement that the documentation does not exist”. My question is do tax returns need to be prepared in order to file Chapter 7 and also do the taxes due if any need to be paid prior to filing? (more…)
If I Forget To List A Debt On My Chapter 7 Bankruptcy, Is That Debt Still Discharged?
Sunday, December 12th, 2010Question
Is medical debt incurred before filing chapter 7 bankruptcy, but not included in the creditors matrix, still dischargeable?
Answer:
The answer will depend on the specific context, so there are a few issues to discuss. Howefver, realize that one of the debtor’s duties in bankruptcy is to disclose ALL known creditors on the bankruptcy petition. First, in general, in chapter 7 bankruptcy, if a debt is not listed on the matrix (by excusable neglect), that debt is still discharged so long as the chapter 7 bankruptcy is a no asset case. A no asset chapter 7 bankruptcy is a case in which the debtor has no non-exempt assets for the chapter 7 bankruptcy trustee to distribute to creditors; that is, nothing to pay to creditors. (more…)
Is Converting a Traditional IRA to Roth IRA Income for Chapter 7 Means Test?
Wednesday, November 24th, 2010Question:
If a Traditional IRA is converted to a Roth IRA, is that action considered income for the means test in a Chapter 7 Bankruptcy filing?
Answer:
For the benefit of readers, let’s back up and understand why this question would even come up. A Traditional IRA is funded with pre-tax dollars; meaning the money you contribute to a traditional IRA is not taxed before you deposit it into the account. A Roth IRA is funded by after-tax dollars; meaning the money you contribute to a Roth IRA is taxed before you place it in the Roth IRA. The main benefit of a Roth IRA is that when you withdraw funds at retirement, the withdrawals are not taxed; whereas with a Traditional IRA, the withdrawals at retirement are taxable. If you convert a Traditional IRA to a Roth IRA, an income event takes place for “tax purposes.” (more…)
Bankruptcy is the Closest Consumer Equivalent to Quantitative Easing!
Sunday, November 7th, 2010If you have been listening to or reading financial news lately, then you have probably come across the term ‘Quantitative Easing.’ The Federal Reserve announced on November 3 a second round of Quantitative Easing which is referred to as QE2. What is QE? In common sense terms QE entails the Federal Reserve creating money (in this instance, $600 Billion) which it then uses to buy financial assets such as federal and corporate bonds from major banks. (more…)
401K Hardship Withdrawal Prior to Bankruptcy Discharge?
Friday, October 15th, 2010Question
Is it okay to deposit a 401K hardship withdrawal payment AFTER my 341 meeting? Or do I have to wait for the discharge?
Answer:
You didn’t mention which chapter of bankruptcy you filed, but if you need a hardship withdrawal, I will assume chapter 7 bankruptcy. Strictly speaking, all assets, even exempt assets are part of your bankruptcy estate until your case is discharged and closed. (more…)
