Cancellation of debt as income?

Question

On the 05 1040, I've been told that debt cancellation may not be considered taxable under certain provisions regarding insolvancy...how to do I present this on the return?...I know, I should know this but I'm having a mental block and I want to get this return out today.

Thanks for trying...for future reference : IRC sect 108; debt forgiveness is not taxable if the taxpayer was insolvent at the time of the forgiveness, need to attach statement to that effect when filing return.

Answer 1

i imagine cancellation of debt would only be income if it was previously deducted as an expense

Answer 2

Form 982 I think.....