{"id":106724,"date":"2023-01-09t13:00:38","date_gmt":"2023-01-09t18:00:38","guid":{"rendered":"\/\/www.g005e.com\/?p=106724"},"modified":"2023-02-24t10:01:15","modified_gmt":"2023-02-24t15:01:15","slug":"how-to-avoid-tax-on-canceled-debts","status":"publish","type":"post","link":"\/\/www.g005e.com\/2023\/01\/09\/how-to-avoid-tax-on-canceled-debts\/","title":{"rendered":"tax: explaining the bad news about canceled debt to clients"},"content":{"rendered":"

\"//www.g005e.com/store/wp-json/wp/v2/posts/\"meet form 982.
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by eric l. green
\ntax rep network<\/a><\/u>
\n<\/em>
\n\u201cwhat do you mean i have to pay tax on that debt? it was a debt, and they forgave it. the bank gave me a gift; i am pretty sure that is how it works.\u201d<\/p>\n

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all of a sudden, my client \u2013 who five minutes before told me they knew nothing about taxes \u2013 is now explaining to me, a tax attorney, that the canceled debt cannot be income and that a third-party bank obviously meant it as a gift.<\/p>\n

sadly, it is not a gift; there was never any intent for it to be a gift. when either the bank or another creditor writes off that debt you owed, they are required to file a 1099-c to report the canceled debt to the irs so the lender can take the bad debt write-off. according to congress, the courts and the irs, the recipient now has income because they received value that they do not have to repay. in tax parlance it\u2019s called an \u201cascension to wealth.\u201d<\/p>\n

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