How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Wendy Reed Your Own Question
Wendy Reed
Wendy Reed, Enrolled Agent
Category: Tax
Satisfied Customers: 3346
Experience:  15+ years tax preparation and tax advice.
Type Your Tax Question Here...
Wendy Reed is online now
A new question is answered every 9 seconds

In August 2010 our mortgage company, Chase, readjusted our

Resolved Question:

In August 2010 our mortgage company, Chase, readjusted our mortgage from a variable to a fixed rate 4% loan. They also reduced our principal by $119,170.38. This meant our payment would never go up and we thought this was a great deal. Now we have received a form 1099-C stating the cancellation of debt. The instructions on the back of this form states that we can exclude this amount from our income if it was for a qualified principal residence indebtedness, and secured by that residence, which it was. Can we exclude this amount from our income?
Submitted: 6 years ago.
Category: Tax
Expert:  Wendy Reed replied 6 years ago.

Thank you for giving me the opportunity to assist you. I will give the best answer that I can with the information provided.


Hello there,


Yes, this is possible. As long as this is your principal residence, forgiven debt(even that forgiven due to a modified or restructured loan) may be excluded from income due to the Mortgage debt Relief Act of 2007. Up to 2 million of debt may be excluded from income this way.


Here is a link to the info:,,id=179414,00.html


You will need to file Form 982 to use this exclusion.


Wendy Reed and other Tax Specialists are ready to help you