Posted by David M. Petrovich on April 01, 1999 at 12:47:18:
The textbook definition for insolvency would suggest that most people are, in fact, insolvent. While bankruptcy might suggest insolvency, there are many who seek bankruptcy protection without being insolvent.
Forgiven debt treated as income is a gray area. Suggest that you build into the deal future CPA fees for your homeowner. Find a CPA with experience in this area, who has committed to a position, remains consistent, and is willing to go to bat for your homeowner if necessary. It is all a matter of interpretation.