Did you know cancelling debt may result in taxable income?

In general, cancelling debt produces income to the debtor in an amount equal to the difference between the amount due on the obligation and the amount paid for the discharge. The rationale for this principle is that the debtor is provided with an economic benefit that is equivalent to income.
Exceptions to the recognition of cancellation of debt income include:
·       Qualified residence debt

·       Insolvency 
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·       Certain bankruptcies
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If you need more information,  please contact us at info@huffandmarshall.com or 714-841-9710.