Taxable Cancellation of Debt
Jan 01, 2012OUTCOME: Win - cancelled debt excluded from income; penalties and interest waived
A broker signed a standard industry compensation agreement which provided for an immediate advance on future commissions to be repaid gradually over time. The taxpayer voluntarily terminated his employ ... ment prior to repayment, and the firm forgave the unpaid balance. The IRS treated the cancelled debt as income, triggering tax, penalties, and interest in excess of $100,000.
