Mike and Marilyn owned and lived in their home since 2001. They could not make the mortgage payments, so they moved out of their home in July 2013. In January 2014, they received Form 1099-C from their mortgage company. Box 2 showed canceled debt of $75,000 and box 5 indicated that the loan was a recourse loan, which made them personally liable for the debt. Their home was never used in a business or as a rental property. The mortgage was used to purchase the home and was secured by the home. They did not file bankruptcy.
True or False? Mike and Marilyn's debt is referred to as nonrecourse debt.
True or False? Mike and Marilyn will not have to report the canceled debt as income because it meets one of the exclusions to the general rule.
The canceled debt will be reported on:
True or False? VITA/TCE volunteers can assist taxpayers who lose their home during bankruptcy.
Select the correct answers, then click Check My Answer.