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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Forgiveness of debt... Posted by Ward-CA- on October 29, 2003 at 4:04 PM In Reply to: Short sale posted by Laurie on October 29, 2003 at 9:45 AM : Oh boy do I have a question... We were in the process of doing a short sale on our rental property. The bank has accepted a bid that is $40,000 less than what we owe and we thought this was great. But just now the bank informed me that we will be responsible for taxes on the $40,000 to the IRS? Is this right? And how much could that amount to? Thanks, Laurie ============ Laurie, If you borrow money from someone, and then later on are not required to pay it back, then you've essentially received income that you need to pay income tax on. The amount of tax of course will depend on the tax bracket you fall into given other income you've received in that particular tax year. The lender will send you a 1099 form at year's end. Hope this helps. Follow Ups: Post a Followup: Name : E-Mail : Subject : Comments: : : Oh boy do I have a question... We were in the process of doing a short sale on our rental property. The bank has accepted a bid that is $40,000 less than what we owe and we thought this was great. But just now the bank informed me that we will be responsible for taxes on the $40,000 to the IRS? Is this right? And how much could that amount to? Thanks, Laurie : ============ : Laurie, : If you borrow money from someone, and then later on are not required to pay it back, then you've essentially received income that you need to pay income tax on. : The amount of tax of course will depend on the tax bracket you fall into given other income you've received in that particular tax year. The lender will send you a 1099 form at year's end. : Hope this helps. Optional Link URL: Link Title: Optional Image URL: [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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