IRS Publication 4681: Canceled Debts, Foreclosures, Reposessions & Abandonments

Those who are trying to figure out how to handle the tax ramifications of a cancellation of debt on a short sale, foreclosure sale, loan modification, or any other debt cancellation might want to consult IRS Publication 4681: Canceled Debts, Foreclosures, Reposessions and Abandonments.

While this publication indicates that it is for use in preparing 2007 tax returns (as opposed to 2008 returns), it is the most recent version of the publication put out by the Internal Revenue Service and, accordingly, the information contained therein may be useful.

For more from the IRS on cancellation of debt, see:

• IR-2008-17 - Mortgage Workouts, Now Tax-Free for Many Homeowners; Claim Relief on Newly-Revised IRS Form,
• The Mortgage Forgiveness Debt Relief Act and Debt Cancellation. short sale income tax