For many homeowners, the current economy has left them struggling with debt. They are unable to pay their mortgage’s current rates and are thus facing foreclosure. Should this happen much if not all of the debt may be forgiven, and in some cases the homeowner may accrue more money than what was owed. He would be left with a lump sum that would have varying tax implications depending on how it was gotten. For this reason, the IRS has created a Web site explaining each possible situation and how the funds should be handled. In nearly all situations, any moneys beyond those that were owed would be taxable, but there are some instances in which that is not the case. For instance, if the debt were erased through bankruptcy, it would not be considered taxable income. Similarly if the indebted were insolvent meaning his liabilities exceeded his assets, it is probable that at least a portion of the debt would not be taxable. Farm debts, depending on the nature of the loan, as well as non-recourse loans and forgiven debts would also not be taxed. Full details can be found at the page, “Questions and Answers on Home Foreclosure and Debt Cancellation.”