Taxes (TAX)

[ypsiCPA]

Cancellation of Debt

With our glorious economy, many are experiencing cancellation of debt (credit cards, car loans, mortgages), sometimes in conjunction with foreclosure.

When debt is canceled, taxpayer will receive a 1099-A or 1099-C. Frequently that income will not be taxable (if there is a bankruptcy, or taxpayer has a negative net worth after the debt cancellation). Form 982 should be filed with the tax return unless cancellation of debt income is fully taxable.