IRS Taxes Apply If Your Debt Is Cancelled, Here Are Exceptions

IRS Taxes Apply If Your Debt Is Cancelled, Here Are Exceptions

When a debt you owe is canceled or discharged, the tax code treats the wiped-out debt as cash income to you that you must report. If you owe $500,000 to the bank, but the bank forgives it, it’s as if the bank just handed you $500,000 so the IRS wants a cut. Fortunately, there are exceptions.

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