I am foreclosing an investment propert, a condo that I was renting out. I am keeping my house aka primary residence.
I know about the Forgivness act which applies to your primary residence, which provides Tax Relief For Cancelled Mortgage Debt, however Turbo Tax states:
Although lenders must send 1099-C forms reporting taxable income whenever cancelled debt is $600 or more, the tax bill itself is forgiven if you are in bankruptcy or are insolvent.
Insolvency means your debts (including that mortgage) exceed the value of all your assets. You use IRS Form 982 to claim the exclusion.
So which box do I check?
1. Amount excluded is due to (check applicable boxes)
b. Discharge of indebtedness to the extent insolvent (not in a title 11 case)
OR
d. Discharge of qualified real property business indebtedness
If you are going to tell me to speak to a Bankrupcy attorney or an Accountant, than don't bother typing, the reason I am on this forum is to hear it from someone who has gone through this or is willing to share their professional opinion without a consultation fee.

