Yes, I have heard of this business practice and it makes perfect sense to me. John Doe goes to the bank and borrows $200,000 to buy a farm. The bank loans him the money and he is now $200,000 (or one farm richer). He begins repaying the loan but, with $100,000 still owed, he stops paying. The bank is hung out for $100.000. They foreclose on the farm in an effort to recuperate some or all of their money. They recover $60,000 but they are still $40.000 in the hole. If they "write it off" John still has $40,000 of the banks money. Through foreclosure his debt is forgiven and he walks away with the $40,000. In the eyes of the IRS that money is income to be treated like any other earnings. Therefore, the bank is required to issue a 1099 so John can be taxed properly. Kind'a sucks but its the law!
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Today's Featured Article - An AC Model M Crawler - by Anthony West. Neil Atkins is a man in his late thirties, a mild and patient character who talks fondly of his farming heritage. He farms around a hundred and fifty acres of arable land, in a village called Southam, located just outside Leamington Spa in Warwickshire. The soil is a rich dark brown and is well looked after. unlike some areas in the midlands it is also fairly flat, broken only by hedgerows and the occasional valley and brook. A copse of wildbreaking silver birch and oak trees surround the top si
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