1099 issued for CDBG grant?

[Community Development Banking List]

Original message from: cbanda@wchr.org

Hello Community Development World,

Our community loan fund makes CDBG deferred home improvement loans to income
qualified borrowers (i.e. borrower is eligible to have 50% of a $5,000 loan
deferred, when the $2,500 portion is paid in full, the remainder becomes
forgiven to the borrower)



Do organizations issue 1099C's of the deferred income portion ($2,500)?



Thanks,



Cristo R. Banda

Loan Fund Director

Worcester Community Housing Resources, Inc.,

11 Pleasant Street, Suite 300

Worcester, MA 01609

www.wchr.org

cbanda@wchr.org

508-799-0322, (fax) 508-799-7771

[Community Development Banking List]

Original message from: carolyn.warden@live.com


Oh NOoooooo.

1099 Cs are for charged off or forgiven debt, typically when you do not get repaid & give up all collection efforts.

YOu said deferred - so eventually you get repaid, right? I'm not familiar with this program.

1098 might be what you need to send, if this is a real estate secured loan-type transaction, making the interest paid deductible on an individual's itemized deductions schedule.

Please ask a Tax accountant to be certain.

1099'c almost always mean "THis person is a deadbeat" in my experience, so I applaud your research into getting a correct answer.

Carolyn Warden, CCUE

224-656-6081 home office
720-841-1413 cell phone
www.CarolynWarden.com
www.youtube.com/bechangemanagement

Laughter is the sun that drives winter from the human face.
Victor Hugo








From: cbanda@wchr.org
To: communitydevelopmentbanking-l@cornell.edu
Subject: 1099 issued for CDBG grant?
Date: Wed, 9 Feb 2011 14:44:19 -0500






Hello Community Development World,

Our community loan fund makes CDBG deferred home improvement loans to income qualified borrowers (i.e. borrower is eligible to have 50% of a $5,000 loan deferred, when the $2,500 portion is paid in full, the remainder becomes forgiven to the borrower)

Do organizations issue 1099C’s of the deferred income portion ($2,500)?

Thanks,

Cristo R. Banda
Loan Fund Director
Worcester Community Housing Resources, Inc.,
11 Pleasant Street, Suite 300
Worcester, MA 01609
www.wchr.org
cbanda@wchr.org
508-799-0322, (fax) 508-799-7771

CDB list instructions http://www.runonthebank.net/cdblist.htm

[Community Development Banking List]

Original message from: ajloubert@aol.com


Cristo:

The IRS has specific rulings that can be found on their web site. A tax expert is the best place for a credentialed answer or the I.R.S. can provide it. Please note that if the loan instruments clearly define when a loan must be paid back, under what circumstances payments must be paid, and when a portion of the loan is forgivable, then if all terms are met by the borrower and the Note calls for the remaining 50% of the balance to be forgiven, there is no reason to file a 1099c (for charged off debt). The borrower has complied with the terms of the Note (paid as agreed) therefor, there may be a requirement for reporting some sort of income but not as suggested in your inquiry. Perhaps reporting it as a gift may be appropriate. IRS Publication 950 discusses gifts. An amount of $2,500 is below the taxable amount (per IRS Pub. 950). Read the info to determine if there is even a need to report anything.

Please note I am not an attorney or tax expert, you will need to substantiate any decision with information beyond what is written here.

Good Luck,

Andrew J. Loubert
President
Community Reinvestment Solutions, Inc.
602.791.0590
crsarizona@aol.com
www.crs-advisors.com








-----Original Message-----
From: Cristo Banda <cbanda@wchr.org>
To: communitydevelopmentbanking-l@cornell.edu
Sent: Wed, Feb 9, 2011 12:44 pm
Subject: 1099 issued for CDBG grant?



Hello Community Development World,

Our community loan fund makes CDBG deferred home improvement loans to income qualified borrowers (i.e. borrower is eligible to have 50% of a $5,000 loan deferred, when the $2,500 portion is paid in full, the remainder becomes forgiven to the borrower)

Do organizations issue 1099C’s of the deferred income portion ($2,500)?

Thanks,

Cristo R. Banda
Loan Fund Director
Worcester Community Housing Resources, Inc.,
11 Pleasant Street, Suite 300
Worcester, MA 01609
www.wchr.org
cbanda@wchr.org
508-799-0322, (fax) 508-799-7771


CDB list instructions http://www.runonthebank.net/cdblist.htm