Do You Owe Taxes on Cancellation of Debt?

For those who have lost a home or defaulted on other debt, the salt in the wound might be the income liability associated with cancellation of debt.   As you may know, when you are relieved of debt, the IRS considers the amount to be taxable income.   And this is the time of year when those 1099C notices show up.

But if you were insolvent at the time, you may have an easy way out.  Here’s a good article for those facing an income tax liability due to cancellation of debt.