The National Directory of Certified Public Accountants

Ask A CPA - Cancellation of Debt

Are My Debts That Were Cancelled In Bankruptcy Taxable?

Debt cancelled in a Title 11 bankruptcy case is not includable in your gross income if the cancellation is granted by the court or under a plan approved by the court. Certain losses, credits and basis of property must be reduced by the amounts excluded by cancellation of debt.

If you need professional help with "Cancellation of Debt" or have other tax questions, we can help you find a local licensed CPA for a free, no-obligation consultation.