Legal Question in Tax Law in California
charge off and tax
is that true that you have to declare the charge off account from your credit report as income on tax return?
why do they still come after you with collection company?
if i bankrupcty ch 7 do i still have to claim the charge off as income?
Asked on 4/13/09, 2:40 am
1 Answer from Attorneys
Mark Muntean
Mark Muntean, Attorney at Law
Re: charge off and tax
It is true that any debt that is forgiven or canceled is income. This is referred to as cancellation of indebtedness income and it is taxable. If a lender writes off a loan, the amount written off, and not collected, is taxable income to the borrower. To the extent a collection gets you to repay any part of the debt, the repaid portion is not income and is not tax.
Special rules apply to bankruptcy.
Answered on 4/13/09, 10:59 am
Related Questions & Answers
Looking for something else?
10,200 active attorneys ready to answer your legal questions today.
Featured Attorneys
Earn additional revenue and grow your business.
