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If a lender discounts (reduces) the principal balance of a loan because you pay it off early, or agrees to a loan modification (a “workout”) that includes a reduction in the principal balance of a loan, the amount of the discount or the amount of principal reduction is canceled debt.
Information about Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments, including recent updates and related forms. Publication 4681 explains the federal tax treatment of canceled debts, foreclosures, repossessions, and abandonments.
related to Pub. 4681, such as legislation enacted after it was published, go to IRS.gov/ Pub4681. What’s New Expiring exclusion for cancellation of quali-fied principal residence indebtedness. At the time this publication went to print, taxpayers could only exclude a discharge of qualified prin-cipal residence indebtedness from income after
You may use IRS Publication 4681, Insolvency Worksheet, to determine if you were insolvent just before the cancellation. Cancellation of qualified farm indebtedness; Cancellation of qualified real property business indebtedness; and
related to Pub. 4681, such as legislation enacted after it was published, go to IRS.gov/ Pub4681. What’s New Foreclosure moratorium and right to re-quest forbearance. If you have a primary and/or secondary federally insured or guaran-teed mortgage loan on your primary residence and you suffered a financial hardship during the
Publication 4681 guides individuals on the federal tax implications of canceled debts, foreclosures, repossessions, and abandoned property. It explains what constitutes income, potential exclusions, and how these events can impact your tax return.
See IRS Publication 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals) for information regarding canceled debts, foreclosures, repossessions, and abandonments.
future developments affecting Publication 4681 (such as legislation enacted after we release it) will be posted at www.irs.gov/pub4681. Photographs of missing children. The Inter-nal Revenue Service is a proud partner with the National Center for Missing and Exploited Chil-dren. Photographs of missing children selected
2013 Publication 4681. Table 1-1. Worksheet for Foreclosures and Repossessions Keep for Your Records. Part 1. Complete Part 1 only if you were personally liable for the debt (even if none of the debt was canceled). Otherwise, go to Part 2.
For more information on figuring gain or loss from the sale of property, see Gain or Loss From Sales and Exchanges in Pub. 544 . You can use Table 1 -1 to figure your ordinary income from the cancellation of debt and your gain or loss from a foreclosure or repossession.