Dorot Law, PA | Datan Zvi Dorot
The short answer is YES! Generally this type of transaction results in what is called "Cancellation of Debt" income, or COD income. This is generally taxed at your regular graduated rates for ordinary income. I highly advise that you consult an attorney or CPA to specifically address the facts in your particular situation, as there may be some things they can do to minimize this liability.
Answer Applies to: Florida