Generally, if a debt for which you are personally liable is canceled or forgiven, you must include the canceled amount in your income. This is commonly referred to as COD income. COD income can be from credit cards, mortgages, consumer loans like cars, LOC, ect. You should receive a Form 1099-C in early 2010 showing the amount which was forgiven or canceled during 2009.
There are several exceptions, exclusions, or reclassification that may result in part or all of your COD income being nontaxable. Two examples of an exception would be Qualified Principal Residence Indebtedness or if you are insolvent. Before claiming any exceptions please consult your tax advisor.
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