When it comes to cancelled debt on real estate it generally comes from either a foreclosure or from a short sale. A foreclosure is when the lender repossesses a property from the borrower due to the loan being in default for an extended period of time. A short sale is when you sell real estate… Read more »
Posts Categorized: Cancellation of Debt
Cancellation of Debt – Insolvency Exclusion
One of exclusions available to reduce the tax liability that comes with receiving a cancellation of debt is available by calculating your insolvency at the time of the discharge of debt. Internal Revenue Code § 108(a)(1)(B) states that gross income does not include any amount which would be includible in gross income by reason of… Read more »
Cancellation of Debt – Introduction
One form of income that often catches taxpayers unaware is cancellation of debt. These are generally reported to the IRS through forms 1099-C or 1099-A. Settling a credit card debt with a bank for an amount less than what was owed might relieve you from one liability, but doing so potentially creates another liability to… Read more »