How will filing personal Chapter 7 Bankruptcy as a Sole Proprietor affect our income taxes?
Nov 24, 2011
in
Chapter 7
My husband’s business is run as a sole proprietorship. We are considering filing personal Chapter 7 bankruptcy. One of the credit cards we would like discharged was used for business expenses only. We have already deducted the business expenses on our 2010 income tax, even though at this point they have not technically been paid. If the debt is discharged, how does this affect our income taxes? Will we have to file an amended 2010 return omitting the expenses, thus paying more tax? Thanks!
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2 comments
Bobbie on November 24, 2011 at 7:06 pm
Sole propriety and schedule C Business income tax Profit and loss schedule is for you to use as a taxpayer with your own self employed income and expenses.
You and your would be the same individual taxpayer for this purpose.
THEY WERE PAID IN THE TAX YEAR 2010 at all?
Wow what a mess you have really created for yourself claiming and deducting your supposed to have been qualified ordinary and necessary business for the previous tax year 2010 when they were not even paid in THE YEAR 2010.
And now at this point in time in your life you are actually realizing that have done completed and signed and incorrectly filled out 1040 income tax return that you filed to the IRS and also that you have already received a income tax REFUND for this incorrectly completed 1040 income tax return.
I really believe that the IRS will will be taking care of this problem for you at this time in your life and you should also be consulting with your trustee of your bankruptcy estate account at this time in your life.
Hope that you find the above enclosed information useful. 0626/2011
tro on November 24, 2011 at 7:06 pm
as a sole proprietor his business is included in your personal return and the credit card he used for business will be included in all the other liabilities that you owe
you have to list them all that you have outstanding
if a credit card debt is discharged and you receive a 1099 C it will be dated in the year that it occurred and that is when you will report it on your tax return