Get Business Indebtedness

In general, if you have cancellation of debt income because your debt is canceled, forgiven, or discharged for less than the amount you must pay, the amount of the canceled debt is taxable and you must report the canceled debt on your tax return for the year the cancellation occurs.

When a debt is discharged, the debtor is no longer liable for the debt and the lender is no longer allowed to make attempts to collect the debt. ... A debt discharge occurs when a debtor qualifies through bankruptcy court.

The qualified principal residence exclusion is not available for a debt forgiven on a second home, rental or business property, auto loan or credit card, but another provision may apply. ...

Taxpayers other than C corporations may elect to exclude COD income derived from the discharge of qualified real property business indebtedness. 1 Qualified real property business indebtedness is defined as indebtedness that (1) was incurred or assumed by the taxpayer in connection with real property used in a trade ...

The IRS Form 982 is the reduction of Tax Attributes Due to the Discharge of Indebtedness. This form is used to determine under the circumstances described in section 108 the amount of discharged indebtedness that can be excluded from a person's gross income.

According to the IRS, if a debt is canceled, forgiven or discharged, you must include the canceled amount in your gross income and pay taxes on that income unless you qualify for an exclusion or exception. Creditors who forgive $600 or more of debt for you are required to file Form 1099-C with the IRS.

Real Estate Indebtedness means the total outstanding amount under: (1) the Aggregate Commitment; (2) the Subordinated Debt of the Borrower (including the Borrower's existing subordinated convertible debentures); (3) the Senior Debt; and (4) other indebtedness, as may be permitted by the Banks, in connection with the ...

An important point to understand is that canceled or settled debts are not the same as debts that have been paid in full. If you've settled your debts, they will appear on your credit report and are considered derogatory because it basically means your loan went into default.

Any debt secured by the principal residence resulting from the refinancing of debt incurred to acquire, construct, or substantially improve a principal residence, but only to the extent that the amount does not exceed the amount of the refinanced indebtedness. ...

In fact, there is a code for the 1099-C that appears to be tailor-made for debt settlement reporting: Code F By agreement. Code F is used to identify cancellation of debt as a result of an agreement between the creditor and the debtor to cancel the debt at less than full consideration. Source.