QUESTION DETAIL
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Votes
I sold my restaurant on a short sale in 2012. I will have a net capital loss as well as cancellation of debt income (CODI), but not in the same year. I will get a 1099 from the bank for CODI. The problem is that I won't get it for 5 years, after I pay off my SBA work-out. Can I report CODI in 2012 to reduce the basis and offset it against the capital loss without the 1099 in hand? The bank is waiting until I pay off the negotiated settlement before issuing the 1099. I won't be able to use insolvency to offset it when it comes in 5 years either.
ANSWER
The BIDaWIZ Team's Answer:
If the bank is not agreeing to relieve you of the remaining debt and doesn't issue you a 1099-C to reflect the relief, then it is not technically considered a COD situation. Tax reporting for a future situation that may or may not occur is not advised.