TAX ON DEBT CANCELLATION 1099-b
Can the IRS add a cancellation of debt as an income in my taxes, even if i did not get that money back from a car that i was financing from a lender and when someone else refinance the car it paid off the debt that i owe. The loan I took out for my car was paid off by someone else but I did not get that amount back from my creditor it was actually paid of by another company by someone else which makes not an earn income for me since i never got money back right ? even if the earn intrest on that debt was cancelled i never got the money back on that intrest right ?
1 Answer from Attorneys
Re: TAX ON DEBT CANCELLATION 1099-b
If you owed $20,000 on a loan, the car was reposessed and sold for $15,000 and you did not have to pay the $5000, the lender can send a 1099 for debt cancellation, which you are generally required to report as income.