Page 41 - Other Income for Individuals

Cancelled Debt

Understanding Other income is required for tax filing.

 In most cases, if a debt you owe is
canceled or forgiven, other than as a
gift or bequest, you must include the
canceled amount in your income.
 You have no income from the canceled
debt if it’s intended as a gift to you.
 A debt includes any indebtedness for

which you’re liable or which attaches
to property you hold.

 If the debt is a nonbusiness debt, report the canceled amount on
Schedule 1 (Form 1040), line 8.
 If it’s a business debt, report the amount on Schedule C (Form 1040)
(or on Schedule F (Form 1040), Profit or Loss From Farming, if the debt
is farm debt and you’re a farmer).

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