Tax Q&A;: Debt Forgiveness
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This daily tax season column publishes tax questions from readers answered by local members of the California Society of Certified Public Accountants.
Q. If a person files for bankruptcy and credit card debt is forgiven or written off, is the forgiven debt taxable in any way?
A. Generally, taxpayers must include forgiven debt as taxable income. However, you do not have to include forgiven debt as income if the those debts were discharged in a bankruptcy proceeding under Title 11 of the United States Code. If you have any questions about whether your debts are considered income or not, consult your bankruptcy attorney or a tax preparer familiar with bankruptcy law. More information is available in IRS Publication 908.
--MICHAEL A. ROZBRUCH, CPA
Tax Resolution Services Co.
Tarzana
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For more information on taxes and to see other questions and answers in this series, go to the Times Web site http://pyxis.nohib.com./taxes. To find a CPA visit the California Society of CPAs at https://www.ca.cpa.org.
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