Thanks in advance for any help, folks.
Until recently I was a 50-50 partner in a Michigan LLC. Business closed in 2012 with outstanding debt to our lender. My partner settled with the bank for an amount substantially lower than the entire balance. We both had personal guarantees on the debt and I had zero resources so I did not settle and did not receive any forgiveness of debt. When my partner settled, he was given a letter indicating our LLC had this substantial debt forgiven. Accountant assumed it applied to both partners when it did not. Bank sued me and I filed Chapter 7 bankruptcy with this debt being the only liability of any consequence. If my debt had been forgiven (as the accountant assumed), I would not have had to file BK, would not have had to pay the attorney to file, etc.
It seems to me that the accountant should correct his mistake, but he's not excited about doing this. My partner, who owns a number of businesses, is an important client to the accountant. I imagine he'd not be happy about a big change to our K1's from 2 years ago, and for all I know it may result in his paying more taxes.
What does someone in this position do? Thanks for reading, and for any help you may be able to give.
jon
Until recently I was a 50-50 partner in a Michigan LLC. Business closed in 2012 with outstanding debt to our lender. My partner settled with the bank for an amount substantially lower than the entire balance. We both had personal guarantees on the debt and I had zero resources so I did not settle and did not receive any forgiveness of debt. When my partner settled, he was given a letter indicating our LLC had this substantial debt forgiven. Accountant assumed it applied to both partners when it did not. Bank sued me and I filed Chapter 7 bankruptcy with this debt being the only liability of any consequence. If my debt had been forgiven (as the accountant assumed), I would not have had to file BK, would not have had to pay the attorney to file, etc.
It seems to me that the accountant should correct his mistake, but he's not excited about doing this. My partner, who owns a number of businesses, is an important client to the accountant. I imagine he'd not be happy about a big change to our K1's from 2 years ago, and for all I know it may result in his paying more taxes.
What does someone in this position do? Thanks for reading, and for any help you may be able to give.
jon