6 ms·

Yikes. Nope, I live in Canada and I had a few tens of thousands in debt forgiven. Definitely didn't have to pay taxes on it. That would be absolutely crazy and

by nrdgrl 7y ago

Yikes. Nope, I live in Canada and I had a few tens of thousands in debt forgiven. Definitely didn't have to pay taxes on it. That would be absolutely crazy and would have driven me to bankruptcy!

iscrewyou 7y ago
Not judging you at all, I promise. I found it ironically funny that forgiving debt could lead someone into bankruptcy. Talk about a win-win situation.
- freedomben 7y ago
  Yep. In my case we were overjoyed having finally worked out a deal with the bank, only to discover that now I was in debt to the IRS instead of the bank :'( It sure feels like your government is shitting on you during an already tough situation.
  - dmix 7y ago
    So the idea is the bank gave you a loan then forgave it, so it’s now income? That’s a big leap in logic and sounds evil considering you never consider that when getting a loan, you only expect the internet to accrue.
    - briandear 7y ago
      It is income. Someone gave you money. Otherwise, why wouldn’t a company “loan” you a higher salary and then just “forgive” the debt? Or, you could set up a company to loan yourself money — the company deducts the “loss” and you don’t pay taxes on the gain.
      - dmix 7y ago
        Like all laws there should be some context. But I guess you’re right it’s an easy loophole to exploit and the simpler the tax law the better.
      - Retric 7y ago
        The principal is presumably income, however the interest or fees should not be. The IRS will even occasionally cancel debt that’s mostly fines and interest without considering it income.
- dsfyu404ed 7y ago
  The IRS definitely (as definite as a capricious federal bureaucracy can be) let you make payments on the taxes in that situation.
  - colejohnson66 7y ago
    This. Despite what many people think, the IRS doesn’t want to bankrupt people. They’ll work with you and set up a payment plan if necessary.
freedomben 7y ago
Yep me too. It's crazy. I had to consult with a bankruptcy lawyer because of this. I couldn't believe it.
homakov 7y ago
What kind of amount in tax are you talking about? Is it net profit anyway compared to paying back tens of thousands?

by nrdgrl 7y ago

Yikes. Nope, I live in Canada and I had a few tens of thousands in debt forgiven. Definitely didn't have to pay taxes on it. That would be absolutely crazy and would have driven me to bankruptcy!

iscrewyou 7y ago

Not judging you at all, I promise. I found it ironically funny that forgiving debt could lead someone into bankruptcy. Talk about a win-win situation.

freedomben 7y ago
Yep. In my case we were overjoyed having finally worked out a deal with the bank, only to discover that now I was in debt to the IRS instead of the bank :'( It sure feels like your government is shitting on you during an already tough situation.
- dmix 7y ago
  So the idea is the bank gave you a loan then forgave it, so it’s now income? That’s a big leap in logic and sounds evil considering you never consider that when getting a loan, you only expect the internet to accrue.
  - briandear 7y ago
    It is income. Someone gave you money. Otherwise, why wouldn’t a company “loan” you a higher salary and then just “forgive” the debt? Or, you could set up a company to loan yourself money — the company deducts the “loss” and you don’t pay taxes on the gain.
    - dmix 7y ago
      Like all laws there should be some context. But I guess you’re right it’s an easy loophole to exploit and the simpler the tax law the better.
    - Retric 7y ago
      The principal is presumably income, however the interest or fees should not be. The IRS will even occasionally cancel debt that’s mostly fines and interest without considering it income.
dsfyu404ed 7y ago
The IRS definitely (as definite as a capricious federal bureaucracy can be) let you make payments on the taxes in that situation.
- colejohnson66 7y ago
  This. Despite what many people think, the IRS doesn’t want to bankrupt people. They’ll work with you and set up a payment plan if necessary.

freedomben 7y ago

Yep me too. It's crazy. I had to consult with a bankruptcy lawyer because of this. I couldn't believe it.

homakov 7y ago

What kind of amount in tax are you talking about? Is it net profit anyway compared to paying back tens of thousands?