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The Professor Nedley Series
January 1, 2010

Tax Consequences of Debts

    The scope of this page is to supply very basic and fundamental information regarding the consequences of the forgiveness of debt.  In the context of our current economy this is happening in the area of home that are underwater, businesses that cannot repay their obligations and commercial debt cancellations other than homes.  There are nowadays specialists in many different phases of debt cancellation.  This includes realtors specializing in "short sales", bankers dealing in the broad area of foreclosures and "deeds in lieu" and tax counsel of all types.  The Internal Revenue Service has their very own, plain English debt publication  - Pub 4681 - "Canceled Debts, Foreclosures, Repossessions and Abandonments".