# Debt forgiveness

**URL:** <https://www.protaxcommunity.com/t/debt-forgiveness/4427>\
**Category:** Tax Topics\
**Created:** [March 29, 2021, 6:26pm UTC](https://www.protaxcommunity.com/t/debt-forgiveness/4427 "2021-03-29T18:26:25Z")\
**Posts on this page:** 2\
**Page:** 1

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**Author:** ![NiceGuy](https://avatars.discourse-cdn.com/v4/letter/n/8edcca/32.png) [@NiceGuy](https://www.protaxcommunity.com/u/NiceGuy)\
**Post date:** [March 29, 2021, 6:26pm UTC](https://www.protaxcommunity.com/t/debt-forgiveness/4427/1 "2021-03-29T18:26:25Z")

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Taxpayer cannot pay their outstanding debt to a creditor $4,520. Creditor forgave outstanding amount.

S80 ITA: Amount must use up against “unapplied non-capital losses of preceding years” (loss carryforwards)

JE:  
DT **AP $4000.00**  
CT **HST $520.00** (reversing out ITC)  
CT **Other income - Debt forgiveness $4,520.00**  
_To clear the AP amount_

Corporation loss carryforward balace: $3,000.00.  
$4520.00 - $3000 = $1520.00 remaining

According to S80, any remaining amounts must be used to reduce UCC of depreciable property.  
An asset class that has a UCC of over $10,000.00 can be lowered by the remaining $1,520.00.

**Do any of these Other income - debt forgiveness amounts go on line 101 of HST return?**

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**Author:** ![jhd.hemeon](https://avatars.discourse-cdn.com/v4/letter/j/3ec8ea/32.png) [@jhd.hemeon](https://www.protaxcommunity.com/u/jhd.hemeon)\
**Post date:** [March 29, 2021, 6:49pm UTC](https://www.protaxcommunity.com/t/debt-forgiveness/4427/2 "2021-03-29T18:49:40Z")

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If the debt forgiven is $4,520, then your debit to A/P is $4,520. Credit to income is $4,000.