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  1. #1
    Join Date
    Oct 2014
    Posts
    8,238

    Default Re: Unpaid Credit Card Debt and 1099s

    Quote Quoting ransomedbyfire
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    So, would a fairly accurate shortcut for calculating taxable income that results from debt forgiveness be to say that "Your net worth immediately after the debt is forgiven, if it is above zero, becomes taxable income", if we overlook all the other tax law details you've mentioned (that I don't think apply to me anyway)?
    I think it is probably accurate to say that the amount that would be included in income under the insolvency test is the lesser of: (1) the amount of the debt discharged or (2) the net worth of the taxpayer immediately after the discharge.

  2. #2
    Join Date
    Oct 2006
    Posts
    16,474

    Default Re: Unpaid Credit Card Debt and 1099s

    Quote Quoting Taxing Matters
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    I think it is probably accurate to say that the amount that would be included in income under the insolvency test is the lesser of: (1) the amount of the debt discharged or (2) the net worth of the taxpayer immediately after the discharge.
    Isn't it the net worth immediately before the discharge rather than after?

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