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I've had clients ask me to to negotiate the taxability of debt forgiveness. Unfortunately, no lender (including the SBA) is actually able to do such a product. Just like your employer is usually recommended to send a W-2 to you every year, a lender is necessary send 1099 forms to every borrowers in which have debt pardoned. That said, just because lenders must be present to send 1099s doesn't mean that you personally automatically will get hit with a huge government tax bill.

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