A taxpayer disputes a bank’s classification of an expired loan as taxable income on a PIT-11 form.
The Bank’s Position
The bank issued a PIT-11 form to the taxpayer, listing the expired loan amount as income from other sources. The bank believes that since the debt expired, the amount constitutes income that the taxpayer should report in their annual tax return.
Taxpayer’s Argument
The taxpayer disagreed with this classification. They argued that expiration does not lead to the cancellation or extinction of the obligation. Civil law still treats the borrower as a debtor, with the only difference being that the creditor cannot demand payment under duress.
Legal Implications
This raises questions about how expired debts should be treated for tax purposes. The distinction between expiration and cancellation under civil law is crucial in determining whether such amounts should be considered taxable income.
