Yes, it’s that time again. Dealing with the annual crop of deadbeats when filing taxes. Last year, I successfully managed to report delinquent debts as either short or long term capital losses or non-business bad debts. This year I have a problem (or maybe Prosper has a problem?) matching up the numbers between

  1. The 1099-B for 2008
  2. The  Lender Statement for 2008
  3. The loan status of the website.

Therefore I thought I’d ask a thousand of my closest friends, whether you know or know someone who has had the same problem and found a solution.

Consider Prosper loan #3897.

My 2008 1099-B says that this was sold or exchanged (Box 1a) on Feb-17-2008. Net proceeds are $5.76 (Box 2).

On the lender statement it says the $51.63 loan started on Oct-13-2006, that its status is “Charge-off” and that the start of the year principal balance was $44.202131. All other lines are blank. Under the charge-off summary, the charge-off date is Feb-17-2008 and the charge-off amount is $44.20.

How does this match up with the net proceeds above at $5.76?

It gets worse. If we look at the page for the loan (you probably need to be a registered lender to see this link), we see the charge-off date above (Feb-17-2008) and the statement that the borrower filed for Chapter 7 bankruptcy on Nov-11-2008 and received a discharge on Feb-10-2009 reducing the loan balance to $0.00 and that there is no possibility of receiving any further recoveries on this loan.

Again, how does this match up with the net proceeds above at $5.76?


  1. Since there are proceeds, one short expect the loan was sold.
  2. However, the loan was discharged in a bankruptcy.
  3. The $5.76 comes out of nowhere.

Prosper did send out a revised lender statement for the year (maybe only for me, specifically), I’m wondering if they are also going to send out a revised 1099?

If anyone has any ideas or know anyone who has any ideas how to solve this before I spend money on a tax service, let me know. It would be much appreciated!

Originally posted 2009-03-31 06:55:30.