There are several ways to avoid paying tax on cancelled debt, but are you using all the exclusions correctly to get the best overall benefit for your client? And after the income is excluded, the important task of reducing tax attributes is often overlooked or performed incorrectly. Explore the controversies surrounding the definition of a principal residence and whether basis in the residence must be reduced. Find out what debts are often overlooked when calculating insolvency. Learn to use the Qualified Business Real Property Debt Exclusion to avoid self-employment tax on a business foreclosure. Explore the deferral of debt cancellation from Reacquisition of Business Debt and determine which of your clients could reap big benefi ts from this new provision. Worksheets will assure you use the exclusions in the proper order, help you calculate client insolvency, and make the allocation of basis reductions simple and quick to perform.