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Unfortunately, the CPA is correct. Debts of a personal nature which are discharged in a Chapter 7 are not taxable but a rental is business property and the debt associated with it is treated differently. You will need to do the work.
Can you lead me to where in the tax code it says that? There seem to be so many opinions about this, and I really wonder if the IRS will follow up, if I just do what I said I was going to do...