The Mortgage Forgiveness Debt Relief Act and Debt Cancellation

We had a client inquire today regarding the tax implications of their bank forgiving the deficiency amount owed after a foreclosure sale.  The bank issued a 1099 of over $100,000.00 in "income" the client must report. 

Does the client need to pay income tax on that "income"?  Depends on whether the property was her primary residence and other factors.  Be sure to engage a CPA, attorney or other tax professional for problems like these.  Attached is an interesting primer.

Mortgage Forgiveness and Debt Relief Act