Illinois Preparers

[arlo]

I have looked at the M1 adjustments to income worksheet and cannot find if income from a canceled debt is taxable on the Illinois return. The income was reported on the Federal return. arlo

[Koss]

Cancelled Debt

If it is included in the federal AGI, then it is subject to taxation by Illinois, unless it falls within one of the subtractions identified in Schedule M.

The are only two subtractions that do not require Schedule M:

(i) Social security and retirement income, and
(ii) state income tax refund.

So if it's not identified on Schedule M, it has to be included in the Illinois base income.

Your post says that the cancelled debt was reported on the federal return, so it's already in the federal AGI...

Unless your post was a typo.

(I've done that myself. I have left out the word not.)

BMK