If I'm a creditor in a bankruptcy case, do I have to pay taxes on the money awarded?

I don't think I have to, but is it considered income or no?


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Most Helpful Guy

  • There are many different considerations. is it wage/salary you are owed? is it a refund of money you've paid out for goods or services that have not been delivered? is it compensation for some loss you have incurred?

    With tax issues, best to seek proper advice!

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    • Called Intuit because I do my taxes with Turbo Tax and they said that since it was an inheritance that was stolen from me and it was labeled child support/alimony by my parent's attorney, that the government couldn't touch it because it was a gift and never meant to be income! All l'll have to do is show them the divorce decree and bankruptcy paperwork if they ever try to collect on it. Yay!

    • Sounds good to me!! Nice one!!

    • Thanks for MHG!

What Guys Said 3

  • The short answer is yes, but you may have already paid them depending on circumstances. What type of creditor are you? Employee? Supplier? Subcontractor? If one of the last two, are you on a cash or accrual basis? If accrual and the money owed is from a previous year, you've likely already paid the taxes on it. Or is there some other basis for your creditor claim?

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    • Called Intuit because I do my taxes with Turbo Tax and they said that since it was an inheritance that was stolen from me and it was labeled child support/alimony by my parent's attorney, that the government couldn't touch it because it was a gift and never meant to be income! All l'll have to do is show them the divorce decree and bankruptcy paperwork if they ever try to collect on it. Yay!

  • That entirely depends on the tax law where you live. It would help to know where exactly you are.

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    • Called Intuit because I do my taxes with Turbo Tax and they said that since it was an inheritance that was stolen from me and it was labeled child support/alimony by my parent's attorney, that the government couldn't touch it because it was a gift and never meant to be income! All l'll have to do is show them the divorce decree and bankruptcy paperwork if they ever try to collect on it. Yay!

  • Yes, capital gain.

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    • Called Intuit because I do my taxes with Turbo Tax and they said that since it was an inheritance that was stolen from me and it was labeled child support/alimony by my parent's attorney, that the government couldn't touch it because it was a gift and never meant to be income! All l'll have to do is show them the divorce decree and bankruptcy paperwork if they ever try to collect on it. Yay!

What Girls Said 1

  • Talk to your tax person

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    • Called Intuit because I do my taxes with Turbo Tax and they said that since it was an inheritance that was stolen from me and it was labeled child support/alimony by my parent's attorney, that the government couldn't touch it because it was a gift and never meant to be income! All l'll have to do is show them the divorce decree and bankruptcy paperwork if they ever try to collect on it. Yay!

    • Well then yay! ✌🏼️

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