2 ms·
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
by 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 agoStill, 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 agoSure it is: it's called fractional reserve banking.