A co-worker of my wife was just bragging about performing a short sale on her home and the lender waiving roughly $40k in debt. How often in a situation like that do you think they report this debt cancellation on their tax return? This woman had absolutely no idea she would now have a big tax bill coming because of her actions.
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To answer your question, I don't know how often they report it, but I imagine that if the bank issues a 1099C, at some point they will be paying for it. The IRS will probably be coming back to them for the taxes. If no 1099C is issued, I would guess that it is not usually reported.
LTOnly in government or politics is a "cut in spending" really an increase. It's just not as much of an increase as they wanted it to be, therefore a "cut". -
personal residence
there is an exemption to income reporting for many cases like this if it was their principal residence. I do not have my book with me to look up the chapter and page.AJ, EAComment
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