The 60 Minutes Walkaway: Conscience and Consequences

Debt forgiveness has long been a taxable event.  But the taxability of purchase money mortgage debt forgiven by a lender was relaxed by the Bush Administration and has been further lessened under Obama.

Yet there are limits, and these should not be a surprise to anyone, including those who appeared over the weekend on 60 Minutes bragging about how they plan to walk away from their homes without remorse - - or even to continue living in their homes without paying their mortgages until lenders physically ousted them, just because they can.

A key exception to tax relief
when mortgage debt is forgiven occurs when a home has been refinanced. Another?  When the owner isn't really insolvent.  To some, this is A Surprise Tax Hit on Foreclosures - WSJ.com. 

To this blogger, it's amazing that the brazen behavior shown on the 60 Minutes episode could occur on a widespread basis in America.  But it's even more amazing that a homeowner could imagine there simply being no direct financial consequences to walking away from their homes, and the contractual debt used to purchase them!

Thoughts? - David