This company has an agreement with a customer for a regular loan where the customer pays the interest. This client for the past seven months has made every payment on time. However, another firm working with this company has looked into this customer%26#039;s past records and sees that previous loans to this customer from other companies have had late or no payments and this person has many financial difficulties. As a result, the loan has been downgraded to non-accrual so all payments are supposed to be counted as being paid toward the principal, not interest. The customer does not know it has been downgraded.
Should the company in question file a 1098 for this customer because they paid what they believed to be interest? Or is there something else they should do?
If you have an answer, could you please include some kind of source for where you answer came from? Thank you.
In this situation, what should the company do about a Form 1098?
A 1098 should only be issued in the case of qualified home mortgage interest. If none was paid a 1098 would not be issued.
On non-tax issues, you should contact your attorney to make sure your company%26#039;s actions are legal under your state law.
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