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We had a promissory note that we had been paying on that the balance was forgiven on during the year, due to death of the note holder, under terms of the will. How do I enter the transaction to make the loan balance 0?
Hi Barb!
You are definitely going to want to get some accountant guidance in the details of this type of transaction, just because of the tax implications there could possibly be.
In general, if you go into the transaction entry screen, you can do a withdrawal for $0.00 (leave the total as 0.00). You would then have 2 lines that offset each other. The first line would be L-, where you could select the promissory note and reduce the balance to 0. It is the second line that I am not sure about, as this would typically be an Income line to claim income from forgiven debt. However, you will want to make sure that this is correct before doing so, especially when there is the death of a taxpayer involved.
Let me know if you have any other questions. Thank you very much.