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Insights Business & Tax Blog

IRS Expands Cancellation of Indebtedness Income Exclusion

February 13, 2014 Cancellation of Indebtedness Income

When a lender discharges debt for less than full consideration, the borrower by default recognizes income for federal income tax purposes. “Qualifying Real Property Indebtedness” is an exception. Forgiveness of Qualifying Real Property Indebtedness may be excluded from income. New IRS guidance expands this exclusion. The Qualifying Real Property Indebtedness…