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View Diary: Someone Just Got $237,000 in Debt Forgiven! (95 comments)

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  •  I'm no tax expert either, but you're right. (3+ / 0-)
    Recommended by:
    jpmassar, wader, gramofsam1

    There's no such thing as a "tax-free" gift over a certain amount (I think it's $20k).  If there was, you'd see a lot of people making deathbed bequests to their kids to avoid the estate tax.  

    •  Your thinking of gift tax which goes against (1+ / 0-)
      Recommended by:
      jpmassar

      the giver. It used t be $10k a year peer person (each) and now it is at $20k

      The way most wealthy people do it is give $20k a year per parent to each child. So with two kids that makes $80k each year you can reduce the ultimate estate.

      However, the forgiveness of debt is an issue. It could be taxable.

      Him I wonder it they could contact the person and say they will settle the claim for a sum of $1 - 5. I don't know.

      I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

      by samddobermann on Wed Nov 13, 2013 at 04:12:09 AM PST

      [ Parent ]

      •  It is not debt forgiveness (1+ / 0-)
        Recommended by:
        jpmassar

        This is NEGOTIATED SETTLEMENT OF DEBT by a third party. Strike Debt buys the debt from the hospital for $0.02 on the dollar (50:1). The hospital offers a quit-claim on the debt in exchange. Strike Debt then writes it off as a GIFT to the original debtor, which is NOT TAXABLE.

        Debt forgiveness becomes income when a LOAN (not a debt for services rendered) is retired without payment (or with only partial payment). If you owe PAYMENT, and the carrier writes it off as charity or bad debt, you DO NOT owe taxes on it as income, since you have no cash to show for it. Only when someone loans you CASH, which you then do not pay back, is it considered income.

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