Tax Relief for Hostages: Canceled Private Debt is Not Taxable Income.
This bill creates a new tax exclusion for U.S. citizens and their spouses who are wrongfully detained abroad. If their private debts are canceled during or shortly after their detention, that amount will not be counted as taxable income. This provides financial relief and prevents unexpected tax burdens during a crisis.
Key points
The cancellation of private debt (up to a $5,000 aggregate limit) for individuals wrongfully detained abroad will not be treated as taxable income.
The relief applies to debts discharged from the start of detention until two years after its conclusion.
The new rules apply to debt discharges occurring after December 31, 2023.
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