I just read this article and thought it would be of interest to have others read it for themselves.
"If the decline in the real estate market or the nation’s economic downturn has caused you to lose your home by foreclosure or short sale, or you voluntarily signed the deed over to the lienholder, you will probably be faced with debt relief income. You can also have debt relief income if you had a credit card, an automobile loan, or other debt forgiven in a settlement with a credit card company or other lender.
Normally, debt forgiveness results in taxable income. But there are several provisions of the tax code that allow individuals to exclude debt relief income and thereby avoid taxes on the forgiven income. The two exclusions that will most often apply this year are:"
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