Yep, the debt foregiveness is "income" in the eyes of the IRS, and taxable. However, if its on your primary residence, its exempt. Also exempt if you are insolvent when the property goes back, also exempt if you declare bankruptcy.
I believe there's also a defense to taxability if you live in a state like Washington, where the only remedy the creditor gets in non-judicial foreclosure is the property back, and the deficiency is automatically waived by the creditor just by virtue of creditor having chosen that method of foreclosure. Because the creditor chose the method of foreclosure, I think the so-called "income" from debt foregiveness would be "income" assigned by a third party, which is not taxable.
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Today's Featured Article - Show Coverage: Central Illinois Strawberry Festival - by Cindy Ladage and Janna Seiz. Every year the coming of summer is highlighted by different events for different people. For some, it is heralded with the end of school, tilling the garden, or completion of the planting season. To us, connoisseurs of find food, antique tractors, farm toys, crafts, and downright fun, the annual Strawberry Festival means summer is here. Every year, in Carlinville, Illinois, the Macoupin County Historical Society and the Macoupin Agricultural Antique Association team up to fill th
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