Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Sam who wrote (71332)	8/26/2009 7:56:46 PM
From: Snowshoe	Read Replies (1) \| Respond to of 74559

>>Why do "taxes lurk" on short sales?<< Tax Hits on Property Short Sales marketwatch.com

To: Sam who wrote (71332)	8/27/2009 11:44:33 PM
From: Ilaine	Respond to of 74559

In a nutshell, when debt is forgiven that's considered income and taxed. I am not going to argue that this makes sense. My older son is in law school, and I have been encouraging him to specialize in tax law because he is very good at math and economics. Last year he informed me that he couldn't do it because tax made no sense to him, he couldn't grasp it. I stopped him. "Let me guess, you just learned about cancellation of debt income, didn't you?" Yes, that was the concept that baffled him. It makes no sense. But it is what it is. Most people get around it by refusing to acknowledge it. If the lender doesn't send you a 1099 the IRS probably won't know about it. But technically even if the lender doesn't send you the 1099 you still owe it, as the lender can't forgive the tax consequences. The main loophole is insolvency, and bankruptcy is the surest way to demonstrate insolvency. Consult a CPA or a tax lawyer, not a message board.