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I've had clients ask me to test to negotiate the taxability of debt forgiveness. Unfortunately, no lender (including the SBA) to improve to do such what. Just like your employer ought to be required to send a W-2 to you every year, a lender is had to send 1099 forms to every borrowers which debt pardoned. That said, just because lenders needed to send 1099s does not that you personally automatically will get hit using a huge goverment tax bill. Why? In most cases, the borrower is really a corporate entity, and you just a personal guarantor. I realize that some lenders only send 1099s to the borrower. Effect of the 1099 relating to your personal situation will vary depending exactly what kind of entity the borrower is (C-Corp, S-Corp, LLC, etc). Most CPAs will possess the ability to to explain how a 1099 would manifest itself. Put your plan together again. Tax reduction is a a couple of crafting a atlas to get to your financial goal. 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