17-Fundamentals of Short-Cancellation of Debt
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Tax Implications for Sellers in a Short Sale: Cancellation of Debt (COD) Income When a homeowner completes a short sale, the forgiven portion of the mortgage debt—referred to as Cancellation of Debt (COD) Income—can have significant tax implications. Under federal tax law, forgiven debt is generally considered taxable income unless an exception or exclusion applies. […]