I have cancelled debt as filed under 1099-C. When doing my taxes, I want to prove insolvency, but I'm having a hard time finding a definitive list of what is considered an asset. My biggest question: I have a retirement account, and the amount in it might disqualify me for insolvency, but I cannot (under rules of employer) take hardship loans or withdrawals-I know, I tried. Therefore I wouldn't consider it an asset because I couldn't use it to pay my debts. But, I have a feeling the federal government may feel differently. Help?
The IRS considers a 401(k) or 403(b) account as an asset when considering insolvency for cancellation of debt. It doesn't matter if you have immediate access to the account or not.
If it is not an asset, then you think it is a liability??? It can ONLY be one or the other. I think the word you are looking for is LIQUID.