IRS Debt Relief - The Amount Of Debt Forgiveness As Taxable Income

May 27, 2010 - PRLog -- Therefore, by getting debt forgiven one can end up owing a large amount of money to the IRS, at a very high interest rate. This article will help someone considering debt forgiveness figure out if it will be considered taxable income.

Aurora Lillo Editor of the "Best Debt Relief Programs" website -- http://www.BestDebtReliefPrograms.net -- pointed out;


“...In the broad sense, all forgiven liability is considered taxable income. This is an "opt out" law in that the only time that forgiven liabilities are not considered taxable income is based on certain specific exclusions written into the law. There are many exclusions, but only three that occur on a regular basis: bankruptcy, insolvency, and debt under the Mortgage Forgiveness Debt Relief Act...”

Liabilities that are forgiven due to a person going through bankruptcy proceedings, therefore, is not considered taxable income. And similarly, money owed that is forgiven because somebody is insolvent is not considered taxable income. The difference between bankruptcy and insolvency is that insolvency is the term for someone who has financial obligation in excess of their assets, which is a legal condition and many people do as a matter of policy.

“...Bankruptcy is a term for people who goes through the process of setting their balance sheet to neutral, likely because they are insolvent and cannot get out. Forgiven debt not considered taxable income under the Mortgage Forgiveness Debt Relief Act is an extremely complex process...” added A. Lillo.

Further Information about the best debt relief programs and debt settlement services available By Visiting; http://www.BestDebtReliefPrograms.net