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I am sorry for the incorrect first respond. The insolvency exclusion calculation apply to all assets (assets owned in the U.S.A. and outside the USA) and all liabilities (liabilities in and outside the U.S.A) to determent the insolvency exclusion. The insolvency exclusion is the amount your total liabilities exceeded the fair market value of your total assets immediately before the discharge. You can read more about debt cancellation at www.irs.gov/pub/irs-pdf/p908.pdf.