| | Single Member LLC Bankruptcy
I have a Single Member LLC client who filed personally for bankrupcty and had all of his LLC debt discharged in the amount of $2million.
He is a custom home builder. How do I report this activtity on his financials and taxes. He is an accrual basis tax payer reporting on Sch C on his personal return.
Do I report the discharge of the whole amount as income? Most of the accounts payable discharged where expensed against a sale of one of his custom homes in the prior tax year. Client just never paid the vendors after the sale.