4 ms·

Indeed. I know that if I can buy a dollar of debt that I owe for a nickel, I want in on that. It'd make things a lot easier on my pocketbook.

• malandrew 14y ago
  More interestingly, how would the 1099-C work in such a case. Wouldn't it be like matter and anti-matter colliding wiping each other out since you would simultaneously incur a tax-deductable loss and a taxable gain of equal value?
  • patio11 14y ago
    sigh No. If you buy $10k of debt for $500, the debt buying business' basis in the debt is $500. If they cancel it, they can deduct $500. If $10k of your debt is forgiven, you get 1099-C'ed for $10k in income. Net-net, this would cause $9.5k in income if you went through with it.
    • Firehed 14y ago
      Still, taxes on $9500 are way lower than the $10000 you originally owed, so it sounds like a win. Until everyone starts doing this and the whole system collapses, at least. That money isn't coming from thin air.
      • ChristianMarks 14y ago
        Sure it is: it's called fractional reserve banking.