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Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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after a short sale and the lender waives what I owe (i.e.

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after a short sale and the lender waives what I owe (i.e. $100K). Will the IRS consider this amount income and tax me or is there a new law that protects short sale homeowners?

HelloCustomer

Generally, lenders who have forgiven a portion of your debt are required to send you a 1099-C form at the end of the year to report the amount of the debt cancellation. There are certain exceptions to when the debt which was forgiven may not be taxable, such as bankruptcy, insolvency, certain farm debts and non-recourse loans.

I am giving you a link to a page in the IRS website which gives more details on the treatment of debt cancellation and under what circumstances if may not be a taxable event.

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank you.

http://64.233.167.104/search?q=cache:-dIuI4JvBzoJ:www.irs.gov/newsroom/article/0,,id%3D174034,00.html+are+short+sales+on+home+reported+to+irs&hl=en&ct=clnk&cd=1&gl=us

 

Merlo and 2 other Tax Specialists are ready to help you
Customer: replied 9 years ago.
Reply to Merlo's Post: thanks for the onfo and link to the IRS about short sales and debt cancellation. It was very helpful.

Please email me this same info so that I can print it out. Thanks!!!

Hello again althea,

Unfortunately on JA we are not allowed to exchange email addresses with the clients, so I don't even have your email and cannot ask for it. However, if you just copy the web address at the top of this page, you can then email yourself a link to this page so you can easily come back to it any time.

Thanks again.

Merlo and 2 other Tax Specialists are ready to help you
Customer: replied 9 years ago.
THANKS ALOT, MERLO!
You are welcome. Hope this all works out for you.