The Tax Court today decided Martins v. Commissioner, T.C. Summary Opinion 2006-43 (3/22/06), which explains the tax consequences of failing to pay off credit card debts. Mr. Martins was unable to pay the $21,800 he owed to American Express, which hired a collection agency to help it collect payment. Mr. Martins eventually paid $15,000, and American Express released him from the remaining $6,800. Result: $6,800 of discharge of indebtedness income under section 61(a)(12).
My Life. My Card. My Income.
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