Sale of a House

[SANDRAO]

Hello, 

I have a situation that I would like to double check... 

A client sold his house in 2021 and he had a loan cancellation of $70,000.00 in 2010 from his mortgage loan... at the time this was not taxable and it was reported to the IRS... does this affect his basis when I am reporting the sale of the house? 

[TaxGuyBill]

Probably?

If Basis is reduced, will the sale be taxable?

You should have the 2010 tax return and look at Form 982.

[Norman2001]

This is from 2010 Pub 523 

Decreases to Basis 

These include the following.
• Discharge of qualified principal residence indebtedness that was excluded from income (but not below
zero).