Do I owe california taxes from a 1099-C?
I did a deed-in-lieu-of-foreclosure in 2012, and received a 1099-C in the mail. Box 2 is about $39,000. Box 5 is checked.
From what I understand, I do not owe federal taxes on this. But do I owe State (California)?
Update:This was my first house, and the whole loan went towards it.
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Answers & Comments
"From what I understand, I do not owe federal"
Maybe yes, maybe no. Same for California.
Was 100% of your loan proceeds used to buy or improve your home? If yes, maybe yes to no tax.
If you used the loan proceeds to, say, pay off a credit card, you have to prove to both the IRS and FTB that you are insolvent. See IRS pub 4681.