by Glenn Tyndall, CPA, Realtor
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Cancelled debt is any money borrowed from a commercial lender that the lender later forgives such that you are no longer obligated to repay the debt. This cancelled debt may be included in income for tax purposes and the lender is usually required to report the amount of the canceled debt to you and the IRS on a Form 1099-C, Cancellation of Debt.
Cancelled debt is not always taxable. The most common reasons for excluded cancelled debt from gross income are:
There are two possible consequences you must consider:
No. Losses from the sale or foreclosure are not deductible.
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