Get IRS Publication 4681 2014
Forgive that debt for less than its full amount, you are treated for income tax purposes as having income and may have to pay tax on this income. Note. This publication generally refers to debt that is canceled, forgiven, or discharged for less than the full amount of the debt as canceled debt. Sometimes a debt, or part of a debt, that you do not have to pay is not considered canceled debt. These exceptions are discussed later under Exceptions. Sometimes a canceled debt may be excluded fro.
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