Are there any exceptions to the rule that canceled debt is counted as income?

• December 10th, 2020
• David Greene
• Comments Off on Are there any exceptions to the rule that canceled debt is counted as income?

When a taxpayer is unable to pay all of a debt and the creditor cancels the unpaid part, the amount of the canceled debt is generally treated as income to the taxpayer under federal tax law.  The creditor reports this…