is 'forgiven debt' taxable income??

[nanademi]

What is the name of your state? Texas

Hubby about to have to file chapter 7.

we have been told by his bookkeeper that forgiven debt is taxable income. The bankruptcy atty says no it's not. who's right?

Thanks a bunch.

 

[Snipes5]

"forgiven debt" is generally taxable unless you were insolvent at the time.

To show this, you'd need to send copies of the court documents to the IRS with the tax return in question.

Snipes

 

[abezon]

But, if you're in chapter 7 & it is granted, you were by definition insolvent.