Topic 431 - Canceled Debt – Is it Taxable or Not? In general, if a debt for which you are personally liable is canceled or forgiven, other than as a gift or bequest, you may have to include the canceled amount in gross income. Depending on the circumstances by which [...]
The IRS published a 30 page guide to dealing with Bankruptcy. Click the following link to view the PDF document. http://www.irs.gov/individuals/article/0,,id=96196,00.html See Page 3 - Individuals Consult an Attorney for specific Bankruptcy Advice.