I went to do my taxes...I have a 1099-A and the FMV is 110,000 and I owed 179,000...I did a deed in lieu of foreclosure...Is my debt canceled? The Hand R Block professional believes so...Just have to put it on the return...I also went bankrupt 3 years ago and did and abandonment of property...am I covered?? Confused
Social Security Lawyers
The Form 1099 is used by creditors to report forgiven debt to the IRS because as a general rule forgiven debt is taxable as income. However, there is one and possibly a second exception that will excuse you from reporting it. Your H&R Block "professional" is sadly misinformed. Find IRS Form 982 (available online at www.irs.gov) and read the instructions.
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In addition to Ms. Sinclair's answer your obligation was discharged in the bankruptcy, therefore under the Internal Revenue Code, Section 108, is not a taxable event. You need to talk with a good CPA to make certain you properly address this matter.
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