It literally says right there that the loan is tax exempt because it is a private education loan. The loan was canceled because Discover got out of the student loan business. The loans canceled just so happened to be delinquent but no where in the section you are referencing does it say that a loan can only be tax exempt if the loan was in good standing when discharged. It says you would generally be responsible if the loan was canceled or paid for by someone else. HOWEVER, due to ARPA, you may be excluded from including it in income if it was:
- A loan for postsecondary educational expenses.
- A private education loan.
- A loan from an educational organization described in section 170(b)(1)(A)(ii).
- A loan from an organization exempt from tax under section 501(a) to refinance a student loan.
How are we coming to different conclusions on this when it’s spelled out right there?
The only thing it lists as a disqualified for tax exemption is if it is canceled because of services you performed for the educational organization that made the loan or other organization that provided the loan.
So again, where are you seeing that these loans would count as taxable income? If you’re trying to make a point on whether cancellation of these loans is due to us somehow providing a service for those lenders, please do explain.
