Cancellation of Debt - Insolvency

This handout defines what it means to be insolvent. Cancellation of Debt - Insolvency It includes a worksheet for a taxpayer to determine if he or she is insolvent and it explains the tax implications of cancelled debt.

HIGHLIGHTS: 

  1. Tax treatment of cancelled debt.

  2. Form 1099-C, Cancellation of Debt.

  3. Taxpayer insolvency and insolvency worksheet.

  4. Reduction of tax attributes due to discharge of debt.


CLIENTS WHO MAY BENEFIT:

  1. Taxpayers who have had debt cancelled.

  2. Taxpayers who are considering a debt negotiation plan.

Individual Income TaxClare FazackerleyTax, Debt Cancellation, Debt Discharge, 1099-C, Insolvency, Worksheet