Canceled Debt -- Is It Taxable or Not?
Amounts that meet the requirements for any of the following exceptions aren't cancellation of debt income.
\nEXCEPTIONS to Cancellation of Debt Income:\n- \n
- Amounts canceled as gifts, bequests, devises, or inheritances \n
- Certain qualified student loans canceled under the loan provisions that the loans would be canceled if you work for a certain period of time in certain professions for a broad class of employers \n
- Certain other education loan repayment or loan forgiveness programs to help provide health services in certain areas. \n
- Amounts of canceled debt that would be deductible if you, as a cash basis taxpayer, paid it \n
- A qualified purchase price reduction given by the seller of property to the buyer \n
- Any Pay-for-Performance Success Payments that reduce the principal balance of your home mortgage under the Home Affordable Modification Program \n
- Amounts from student loans discharged on the account of death or total and permanent disability of the student. \n
Amounts that meet the requirements for any of the following exclusions aren't included in income, even though they're cancellation of debt income.
\nEXCLUSIONS from Gross Income:\n- \n
- Debt canceled in a Title 11 bankruptcy case \n
- Debt canceled to the extent insolvent \n
- Cancellation of qualified farm indebtedness \n
- Cancellation of qualified real property business indebtedness \n
- Cancellation of qualified principal residence indebtedness that is discharged subject to an arrangement that is entered into and evidenced in writing before January 1, 2021. \n
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