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Old 03-26-2010, 07:58 PM
 
Location: Michigan
29,391 posts, read 55,602,856 times
Reputation: 22044

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Central Valley real estate agent Donny Piwowarski last year sold his four-bedroom, 3,500-square-foot house on a half-acre in Tracy for $387,000 — which was $378,000 less than he had paid for it in 2005. Now with tax-filing season here, his situation gets grimmer. If California tax law doesn't change, Piwowarski may owe tens of thousands of dollars in state income tax on the nearly $400,000 in mortgage debt that was "canceled" when he sold his house for less than what he owed.

Californians may have to pay tax on canceled mortgage debt - Inside Bay Area
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Old 03-26-2010, 09:47 PM
 
Location: Central Texas
13,714 posts, read 31,180,231 times
Reputation: 9270
I see no reason debt cancelled by the government is any different than receiving income equal to the amount of the cancelled debt.

Why shouldn't it be taxed? You and I (and other taxpayers) will pay for all the billions in cancelled debt. It is ridiculous.
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Old 03-26-2010, 11:14 PM
 
Location: RSM
5,113 posts, read 19,766,781 times
Reputation: 1927
That's how it works. Forgiven debt is forgiven debt, whatever the source
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