Cancellation of Debt

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Cancellation of Debt

Is my house foreclosure a taxable event?

Asked Tuesday, January 10, 2012 by an anonymous user
The Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for this relief. This provision applies to debt forgiven in calendar years 2007 through 2013. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if (MFS).
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Cancellation of Debt

Is a debt cancellation taxable?

Asked Tuesday, January 10, 2012 by an anonymous user
If a debt is cancelled or forgiven other than as a gift or bequest the debtor generally must include the cancelled amount in gross income for tax purposes. Qualified principal residence indebtness is excluded from income. Exclusions are also allowed for business real estate debt or farm debt of insolvent and bankrupt individuals. The exclusions are allowed for up to 2 million of debt.
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Cancellation of Debt

Is Cancellation of Debt from a primary residence taxable?

Asked Tuesday, January 10, 2012 by an anonymous user
You are allowed to exclude cancelled debt from gross income if it is qualified principal residence indebtness. Qualified principal residence indebtness is debt incurred in acquiring, constructing, or substantially improving your principal residence and which is secured by your principal residence. It also includes debt secured by your principal residence that refinances debt incurred in acquiring, constructing, or substantially improving your principal residence but only to the extent of such refinanced debt. The maximum exclusion is 2 Million or 1 million if filing separately.
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Cancellation of Debt

What Form is used to report the Cancellation of debt exclusion for primary residences?

Asked Tuesday, January 10, 2012 by an anonymous user
You can claim the exclusion for qualified principal residence indebtness on Form 982 by checking the box on line 1e and entering the excludable amount on line 2. If you continue to own the residence you must reduce the basis on line 10b.
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Cancellation of Debt

What Form is a Cancellation of Debt reported on?

Asked Tuesday, January 10, 2012 by an anonymous user
Form 1099-C is issued by banks, credit unions and federal government agencies that forgives or cancels a debt that you owe $600 or more. Generally the amount in box 2 must be reported as other income on Form 1040 line 21 unless one of the exclusions applies.
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Cancellation of Debt

Is my cancellation of credit card debt taxable?

Asked Tuesday, January 10, 2012 by an anonymous user
If debt on your credit card was cancelled, you must report the cancelled amount as income on Form 1040 line 21 unless you were insolvent immediately before the cancellation or the cancellation occurred in a Title 11 bankruptcy case.
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Cancellation of Debt

Are there tax consequences to my mortgage restructuring?

Asked Tuesday, January 10, 2012 by an anonymous user
If your lender agrees with a restructuring, workout that reduces the principal of your debt, the debt reduction is considered cancellation of debt and reportable as other income on Form 1040 line 21 and you may claim the principal residence exclusion.
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Cancellation of Debt

Is cancellation of my student loans taxable?

Asked Tuesday, January 10, 2012 by an anonymous user
Generally, the cancellation of student loans results in taxable income unless an exception exists. Certain exclusions exist for working in a certain geographic location, public service positions in government or charitable organizations, undeserved communities
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Cancellation of Debt

Are my debts that were cancelled in bankruptcy taxable?

Asked Tuesday, January 10, 2012 by an anonymous user
Debt cancelled in a Title 11 bankruptcy case is not includable in your gross income if the cancellation is granted by the court or under a plan approved by the court. Certain losses, credits and basis of property must be reduced by the amounts excluded by cancellation of debt.
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