IRS-Relief

Fortune cookie debt forgivenesss

 The Mortgage Forgiveness Debt Relief Act
 and Debt Cancellation

If you owe a debt to someone else and they cancel or forgive that debt, the canceled amount may be taxable.
Our staff will assist in processing the hardship letter and the IRS Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Adjustment).

 Debt reduced through debt forgiven with short sale pre- foreclosure, qualifies for relief. Up to $2 million of forgiven debt eligible for exclusion $1M if filing separately.

The Mortgage Debt Relief Act of 2007 provisions applies to debt forgiven in calendar years 2007 through 2015.

Up to $2 million of forgiven debt eligible for exclusion ($1 million if married filing separately). The lender is usually required to report the amount of the canceled debt on the IRS Form 1099-C, Cancellation of Debt. No tax is due however it is essential to report using appropriate forms.

 More information, including detailed examples found in Publication 4681, Canceled Debts, Foreclosures, ... and Abandonments. Also see IRS news release IR-2008-17.