_____ 19. A taxpayer who disposed of his or her home in 2016 in a short sale had to recognize up to $1 million in cancellation of indebtedness income.

Question

Quizplus · Accepted Answer

The Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence, up to a limit of $2 million ($1 million if married filing separately) through December 31, 2016. Therefore, a taxpayer who disposed of his or her home in 2016 in a short sale may be able to exclude up to $1 million of cancellation of indebtedness income.

_____ 19 a Taxpayer Who Disposed of His or Her Home