Learning Objective :
The learning objective of this course is to review
the general rule requiring canceled debt to be included in income, exceptions to the general rule, exclusions from the general rule and the ordering rules for reduction of tax attributes.
Prerequisite: None
Course level: Basic
Advanced preparation: None
Teaching method: Online study
Recommended hours: 3
Summary of Contents:
Lesson and Objectives |
Reading
Assignment |
| Cancellation of Debt |
|
1. Canceled Debts |
Chapter 1 |
The learning objectives for this lesson are to gain an understanding of:
-
Exceptions
-
Exclusions
- Reduction of Tax Attributes
|
|
2. Foreclosures and Repossessions |
Chapter 2 |
The learning objectives for this lesson are to gain an understanding of:
|
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| 3. Abandonments |
Chapter 3 |
The learning objectives for this lesson are to gain an understanding of:
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Sample Exam Questions:
1. Sam Johnston owed $3,400 in back interest on his mortgage loan. The lender cancelled both the $3,400 unpaid interest and the $325,000 loan balance. Sam’s potential cancellation of debt income is:
a) $3,400
b) $321,600
c) $325,000
d) $328,400
2. James got behind on his Hummer payments because he had to spend so much money on gas. He voluntarily turned it back into the dealer, the dealer sold it and the dealer forgave the $2,200 remaining balance of his loan.
James may have taxable income for the amount of the cancelled debt.
a) True
b) False |
