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Forgiven debt by death

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doncopeland

Guest
If someone who you owe money to dies and they forgive the debt, is the amount taxable oe does it then depend on the total value of the estate.

eg. $100,000.00 loan forgiven by decedant, total estate value $300,000.00. The only person who receives anything in the will is the same person who owes the money. In this situation since the total estate is less than $1 million, and not subject to the estate tax, but what about the loan amount. Is it now subject to income tax by the debtor.:confused:
 


L

loku

Guest
Because the debt was cancelled as a bequest, the debtor does not have to report it as income: as a bequest, it is not subject to income tax.
 

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