Why is my debt cancellation on 1099-C considered income when I have nothing to show?
I have filed my taxes for 2012, and I just received a 1099-C for a debt from GMAC that was cancelled last year. This was from a vehicle that was repossessed in 2010. The original payoff was $5410 (the difference between the loan I financed and the amount the vehicle was auctioned for), of which $3246 was cancelled after I paid the difference to GMAC ($2164).
My question is this: How is this considered income when I never actually had any of that money and I do not own the property? This is not like a credit card pay-off, where the money has already been spent!!
I am expected to include this in my Gross Income for the year? It seems like I am being double-taxed here.
PLEASE HELP!