The general tax rule that applies to debt forgiven treats the amount forgiven, sometimes referred to
as phantom income, as taxable income to the borrower.
Not exact matches
When you pay tax on interest that you've earned but not collected, it is known
as «
phantom income.»
Investors will also be taxed on inflation adjustments to the principal in the year in which the adjustments occur, even though the principal adjustments would not actually be received from Treasury until maturity (a situation that is sometimes described
as taxing «
phantom income»).
These funds address the
phantom income issue by paying out a monthly distribution that includes both the coupon
income coming from the underlying TIPS held in the funds,
as well
as the principal adjustment for inflation.
What you report, is what you get taxed on, with the exception that firms that are heavily indebted to avoid paying taxes would get taxed on
phantom income, the same
as private equity.
Other items create timing differences, such
as depreciation differences between the two tax systems, and the
phantom income from exercising incentive stock options.
The tax essentially views forgiven loans
as «
phantom»
income; therefore, this
income is taxable.
The Mortgage Cancellation Relief Act of 2007, S. 1394, introduced by Sens. Debbie Stabenow, D - Mich., and George Voinovich, R - Ohio, among others, would direct the IRS not to count loan forgiveness under a workout
as taxable
phantom income.
I could also say that your fee - for - service «agent «is also a leech, waiting for you to show up again in order for him / her to boiler plate another offer on another
phantom property; if only I could have been able to do that to make a nice
income without feeling just a little bit cheap with my expertise and most importantly, my time regarding letting my client in on the negatives of said property
as I saw them... from an objective point of view, and not from a subjective, already - emotionally - attached - to - the - property point of view of the buyer, being something like a person falling in love with a piece - of - crap used car because it is a favourite colour.