Re: Clarification on 1099

Posted by NJD on June 26, 2007 at 05:46:29:

In Reply to: Re: Clarification on 1099 posted by Henry_CA on June 25, 2007 at 17:22:25:

The fact you "have not seen any tax code addressing weather the homeowner is required..." does not in any way negate the IRS position that forgiven debt is considered ordinary income... and ordinary income is subject to tax. There are exceptions which render this income exempt from tax, but it must be reported and treated as ordinary income.

In some states, including California, the foreclosure of certain acquisition mortgage financing resulting in a deficiency is not considered forgiven debt and doesn't trigger a tax event.

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