IRS Answers, ‘Canceled Debt – Is It Taxable or Not?’
If you borrow money and are legally obligated to repay a fixed or determinable amount at a future date, you have a debt. You may be personally liable for a debt or may own a property that is subject to a debt. If you see yourself in this article, and are unsure of what to do, call us at (619) 589-8680.
Cancellation of a debt may occur if the creditor cannot collect, or gives up on collecting, the amount you are obligated to pay. If you own property subject to a debt, cancellation of the debt also may occur because of a foreclosure, a repossession, a voluntary transfer of the property to the lender, abandonment of the property, or a mortgage modification. Continue reading