| Author |
|
ash123
Newbie
Joined: 28 Oct 2009
Online Status: Offline
Posts: 5
|
| Posted: 04 Nov 2009 at 10:57 | IP Logged
|
|
|
I don't understand this concept of cancellation of indebtedness. It
states that the Supreme Court has held that the retirement of
outstanding indebtedness at less than it's face amount results in
taxable income to the debtor. Can someone please help me
understand this concept by giving an example! What is cancellation of
indebtedness?
|
| Back to Top |
|
| |
chevyrcrz28
Regular
Joined: 08 May 2009
Location: United States
Online Status: Offline
Posts: 157
|
| Posted: 04 Nov 2009 at 15:17 | IP Logged
|
|
|
For an easy example, let's say you owe $1,000 on a past debt. This company decides to let you pay $750 in full settlement of your debt. This makes $250 cancellation of debt. This $250 is taxable income to you in the year the debt is forgiven. (There are exceptions to this rule, but this sums up the basic concept)
__________________
REG 99 (May 2009)
AUD 99 (July 2009)
BEC 92 (Aug 2009)
FAR 95 (Nov 2009)
|
| Back to Top |
|
| |
ash123
Newbie
Joined: 28 Oct 2009
Online Status: Offline
Posts: 5
|
| Posted: 04 Nov 2009 at 17:05 | IP Logged
|
|
|
Thanks I understand the concept better now I'm taking my first tax
class I'm a student.
|
| Back to Top |
|
| |
Active Topics 
Memberlist 
Search 
Help
Register 
Login
Topic: Cancellation of indebtedness
Topic Closed)
