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Richard, Tax Attorney
Category: Tax
Satisfied Customers: 55454
Experience:  29 years of experience as a tax, real estate, and business attorney.
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13. Where can I get detailed information as to how to deal

Resolved Question:

13. Where can I get detailed information as to how to deal with a second mortgage, which was forgiven in 2011. Most importantly, if that forgiven money is considered income or forgiven by the IRS as well.

Submitted: 4 years ago.
Category: Tax
Expert:  Richard replied 4 years ago.

Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.

Good morning. Did you receive a 1099-C evidencing the forgiveness? Was this property you principal residence? Thanks.

Customer: replied 4 years ago.
Yes to both of your questions.
Expert:  Richard replied 4 years ago.

Thanks. In that case, you have no tax liability to the IRS for the forgiveness. Normally, debt forgiveness results in taxable
income. But under the Mortgage Forgiveness Debt Relief Act of 2007, taxpayers
may exclude debt forgiven on their principal residence if the balance of their
loan was $2 million or less. The limit
is $1 million for a married person filing a separate return. Details are on
Form 982 and its instructions.

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Customer: replied 4 years ago.