What is cancellation of debt of a deceased person?
Cancellation of Debt of a Decedent. If a debt of a taxpayer is canceled after the death of the taxpayer, the cancellation of debt (COD) income is income to the estate or the non-grantor trust of the decedent and reportable as income on the 1041 return for the estate or non-grantor trust (Reg.
Is canceled debt taxable?
In general, if you have cancellation of debt income because your debt is canceled, forgiven, or discharged for less than the amount you must pay, the amount of the canceled debt is taxable and you must report the canceled debt on your tax return for the year the cancellation occurs. The canceled debt isn't taxable, however,
Is cancellation of debt of a decedent (Cod) taxable?
Cancellation of Debt of a Decedent. Generally, COD income is taxable to the estate under Section 61(a)(12) and reported on Form 1041. The resulting tax liability is payable by the estate. However, if the estate is insolvent, COD income is excludable to the extent section 108 applies, i.e., to the extent the estate’s liabilities exceed its assets.