Everything you ever wanted to know about the tax consequenses of debt forgiveness in bankruptcy

Forgiving debt is basically good, right? I mean its a big part of the Lord’s prayer, just for starters.

But wait until lawyers get a hold of the idea.

This time it is tax attorneys that get to twirl their moustaches in the manner of Snidely Whiplash, and play the bad guy.

In the twisted world of tax law, having your debt forgiven can sometimes lead to a bigger income tax bill for you. Or sometimes not, this is law, after all, and “it all depends.”

Kent Anderson, a bankruptcy lawyer in Oregon, has written a nice piece that explains the ins and outs of debt forgiveness as it applies to taxes and bankruptcy. If you would like a quick primer on the subject, by all means, check it out!

 

By Doug Beaton

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