‘Mortgage Debt Relief’ Category

Debt Cancellation of Indebtedness and the States

One important factor to consider is whether your state has conformed to federal tax law when it comes to the applicable exclusion.  So it is possible...

 

One important factor to consider is whether your state has conformed to federal tax law when it comes to the applicable exclusion.  So it is possible that you may qualify for the exclusion at the federal level, but you still could have a tax problem at the state level.  Obviously, your liability at the state would most likely be a lot less than what it would be at the federal level, but that may be of little comfort.

State tax laws can be complex.  In addition, the states are all broke so they are looking for ways to generate tax revenues.  The good news is that most states will conform to the fed with regard to most tax law.  However, make sure that you consult with a tax professional who is knowledgeable with your state tax laws.

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