Tax on 1099C, Cancellation of Debt Income; Short Sale, Loan Modification & Foreclosure. Exception; Mortgage Forgiveness Debt Relief Act, Bankruptcy & Insolvency. Go To RealEstateMarketingThisWeek.com Part 5 (Excerpt) Mortgage Forgiveness Debt Relief Act of 2007, one exception to paying cancellation of debt income Welcome back to the Velocity of Money I am Michael J. Barnes Arizona’s and I’m with Velocity Financial and were here every week talking about all matters financial, regarding real estate as well as finances. Brett Fallon is back on the air with us again along with Mike Patenella who is a certified public accountant for the last 20 years and amazing brain, were glad he’s back on. Mike we were talking before the break about loan modifications, my point before going off the air was that people think they’re going to get this huge amount of money waived on a loan that they have, realistically what most loan modifications are going to look like is extended term, significantly lower interest rate, generally a fixed interest rate for the entire time, and in some cases they will do some principal reduction, and there is some exclusions for people having to pay tax on that, is that correct? Yes, there is, before I get into that keep in mind that with taxes normally not one rule applies to everybody, were going to talk general but everyone’s going to have their own specific situation, that they’re going to have to really check with somebody and make sure they’re doing the …