User question: It is my understanding that Arizona is an "anti-deficieny state"--Arizona Statue Section 33-814G--therefore if it is a Recourse Debt you can throw away the 1099-C and forget about the canceled monies, which means you do not need to claim them. Is this true?
Answer from blueroof.com: Any 1099 that is reported to the IRS needs to be reported on your tax return. Failure to do so could result in an audit.
However, you are partly correct.
Under the Mortage Debt Relief Act, the tax liability for the canceled debt will basically be zero if the property was your primary residence.
So while you can't just throw it away and have to show it on your taxes, it will have little to no effect on your tax liability.
I am not a tax professional and strongly advise you to speak to a licensed CPA or tax attorney to discuss the details of how this is done and how to report it properly on your tax return to make sure you do not have the tax liability associated with the 1099-C.
*Nothing here is considered to be legal or tax advice. Any and all questions regarding tax or legal issues need to be directed to an appropriate and licensed professional.
Broker for Blue Roof Realty
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