California tax law, forgiven employee debt, gift or income for tax purposes

Cupertino, CA Viewed 424 times. Posted about 1 year ago in Tax

Tax: If a company forgives a debt that an employee owed the company, as far as tax is concerned, would it be considered a gift from the company or an income to the employee and a deduction for the company? - Is this your question? Add additional information

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Answers (2)

Anthony John Colleluori

This attorney is licensed in New York. Posted about 1 year ago.

Usually it is charged as income.You should consult a tax consultant or accountant to acertain what you can do to avoid paying too much tax on this windfall.

Good luck

Janet Lee Brewer

This attorney is licensed in California and 1 other state. Posted about 1 year ago.

A company cannot make a gift to a person (only to a charitable organization); it may be a "bonus", but whatever way you look at it, it is taxable income to the employee. And, yes, forgiving a debt is income.

This information is not intended to substitute for professional legal advice and does not create an attorney-client relationship. You should accept legal advice only from a licensed legal professional with whom you have an attorney-client relationship.