Can cancellation of debt for personal property (vehicle) be considered an adjustment to basis if the price was reduced after purchase?
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In certain situations perhaps - consider an insolvent taxpayer who has part of their auto loan written off but retains ownership of the auto. The insolvency would allow them to exclude COD and then reduce the basis of property at the start of the next year.
I'm guessing that almost never happens - if they receive a 1099-C for an auto loan I'm guessing the car is no longer in their possession. If insolvent they can still exclude the COD and then reduce the basis of whatever property they do have at the start of the next year.
If not insolvent and no other exceptions apply it's just income when canceled.
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