This might get confusing ...here it is. My dear husband was in a family co that went insolvent in 2005. In 2004 he went a purchased a new van for the co in his name only. The co voluntary turned the van back to Capital One. No contact has been made by them since 2005, until Sept of last year (2012) we received a 1099 from an Onyx Acceptance for 10,000, and it's dated 2011. When we received it we called Onyx who said that it had been sold in 2006, we were not contacted on the sale either. The letter accompanying the 1099 said "We apology for any inconvenience our over sight might have caused you that this should have been sent out years ago".....

Our 2005 tax return included the loss of the co, but the van was not included..why? I don't know. It is too late to file an amendment on that return, so what now? Is there no laws or statutes that make this illegal? Penalties & interest for a year, blindsided 5 years after the fact, and dated almost a year before we received it. The co was an LLC but it was only in his name. Does that matter if he was a partner? And he purchased it from Capital One, who is Onyx Acceptance?

I don't know where to start on trying to get this taken care of. I just think it is all wrong on their end. Should I start with this Onyx co.? If they sold it in 2006 and are claiming the loss in 2011 is there not a statue of limitations here?

My acct said if I filed an amendment to my 2011 return it would probably cost me around $3000 without interest or penalties...that is just wrong considering I didn't even get it til Sept 2012.

If there is any advice here that can steer me in the right direction I would appreciate it...I'm desperate at this point

“Our 2005 tax return included the loss of the co, but the van was not included..why?}=============> I don’t think you could deduct the van repossessed. Instead, treat it as if you sold it and you need to report the property sale in the year the repossession occurred. Your lender should send you a Form 1099-A reporting the repossession. If this was your personal vehicle, they’ll report the sale on Sch D. If the vehicle was a business vehicle, they’ll report the sale on Form 4797. You’ll calculate your gain or loss by subtracting your basis in the vehicle from the sales price.The sales price will depend on if you were personally liable on the loan. This should be reported on the 1099-A, box 5. If you were personally liable, the sales price will be the lower of:
•The full debt outstanding by the lender (1099-A, box 2)
•The fair market value of the property (1099-A, box 4)If you weren’t personally liable, the sales price will be the full amount of what you owed on the vehicle immediately before the repossession.You might also have taxable cancellation of debt income in the year the lender cancels or forgives the loan. This isn’t always the same year as the repossession, but it can be. Report it when the lender actually cancels the debt and sends you a Form 1099-C.Include the cancellation of debt as income if you were personally liable for the loan, as reported on the 1099-C, box 5. You can exclude this income on Form 982 if 1 of these applies:•You’re in bankruptcy.•You’re insolvent -- meaning your debts are bigger than your assets.Since the forms are complex and it might affect the tax you owe, consider working with a tax professional in the year you exclude cancelled debt from your income.
“ It is too late to file an amendment on that return, so what now?”=========> As you had a car repossession, then you received the 1099-C in the mail. A 1099-C indicates that your lender has chosen to cancel your debt. Since the cancellation means that you are no longer responsible for paying the debt, the debt is now treated as income. In most instances, you are required to include the amount in box 2 of your 1099-C as taxable income on your tax return. The lender will send a copy of the 1099-C to both you and the IRS. The IRS will adjust your tax return when they receive the 1099-C. However, the 1099-C will increase your tax liability and may cause you to owe additional tax. It is therefore in your best interest to file an amended tax return(2011 return) to add the 1099-C to your income rather than waiting on the IRS to mitigate any penalty and interest charges. You will need to download IRS Form 1040-X from the IRS website or order the form by calling 800-TAX-FORM. Once you've completed the form, attach any amount you owe to your 1040-X and mail it to the IRS processing center.
NOTE:There are some cancellations of debt which are not included as income and therefore require no action from the taxpayer. Some cancellations of debt, such as those covered under title 11 of the bankruptcy code, are not taxable. However, if you can demonstrate that you qualify for an exclusion or exception, you may be able to avoid paying taxes on part or all of that phantom income. One of the most commonly used exclusions is the “insolvency exclusion.” It works like this: you are insolvent to the extent that your liabilities (what you owe) exceed your assets (what you own). If the total amount by which you are insolvent is larger than the amount listed on the 1099-C, you can exclude the entire amount listed on the 1099-C from your income. You’ll have to file Form 982 with your tax return to claim this exclusion. If you the amount by which you are insolvent is less than the amount on the 1099-C then you may be able to avoid including part of that amount in your income.




Is there no laws or statutes that make this illegal?”=====> There are no provisions on federal income tax returns for specifically reporting a car repossession. However, in most situations, TPs must report debt settlement activity related to car repossession by including a special form with their tax returns called Form 1099-C. The IRS requires the lender to mail a 1099 form to the former car owner listing details of the settlement. The debtor must then include the 1099 with his federal tax return or risk penalties for not disclosing the information. The IRS maintains that the taxpayer is responsible for reporting the debt cancellation even if the lender fails to send the 1099 form. The IRS also requires the lender to send the information directly to the IRS. Lenders must report all settlement activity resulting in debt cancellation of $600 or more. Cancellation of debt on a car repossession could lead to a higher tax bill.


“ Penalties & interest for a year, blindsided 5 years after the fact, and dated almost a year before we received it. The co was an LLC but it was only in his name. Does that matter if he was a partner?”========I don’t think so;as said, the IRS requires the lender to mail a 1099 form to the former car owner listing details of the settlement.As long as the bank wrote off any portion of the loan as a cancelled debt and reports it you on Form 1099-C, then you must include that on your tax return as income on your 2005 return.
“ And he purchased it from Capital One, who is Onyx Acceptance? “========>Capital One Acquired Onyx Acceptance Corporation, auto financing co;so, Onyx Acceptance became a subsidiary of Capital One Auto finance.



“I don't know where to start on trying to get this taken care of. I just think it is all wrong on their end. Should I start with this Onyx co.? If they sold it in 2006 and are claiming the loss in 2011 is there not a statue of limitations here? “==============>The time limit for issuing a 1099-C to you is a bit strange, and not well defined. It can be when the lender decides they've gotten all they can, or when the debt is no longer enforceable due to a statute of limitations. This means that it may be seven years before you get a 1099-C (depending on state law). If a debt is cancelled under bankruptcy, then it can be excluded from income. But if the debt isn't resolved in the bankruptcy, then the 1099-C represents "Other Income" to you, and is reported as taxable unless you fall under another exclusion from income. The most common reason for exclusion is "insolvency," when your debts exceed your assets on the date the debt was canceled. I've found that some people feel that they were insolvent, but when actually adding up their assets, find that they were not. An accurate listing of both the assets and liabilities can be difficult to create a year or more after the debt was canceled. As long as you neeed to report 1099C as income, then, you must amend 2005 return. Each year is treated differently - you might pay different percentages of taxes from year to year; you should do it ASAP since the IRS might very well charge you interest and penalties on it (depending on the amount). I guess you need to contact the IRS for more info in detail.

My acct said if I filed an amendment to my 2011 return it would probably cost me around $3000 without interest or penalties...that is just wrong considering I didn't even get it til Sept 2012.If there is any advice here that can steer me in the right direction I would appreciate it...I'm desperate at this point”=========>. Agreed UNLESS you can exclude 1099C on your return due to insolvency.