<prompt> Human: In 2015 I bought my mother a Chevy Trailblazer for about 6. I paid it pretty aggressively with the hope of getting out from under the loan in under 2 years, and I was on track to be paid off in June. However, 3 weeks ago, she hit a patch of slushy ice and rolled it. Progressive totaled it, and gave me a bit over 3k for it, effectively paying off the loan and putting some cash in my moms pocket for the next vehicle. My question is, since this is debt I am no longer paying on, do I need to pay any sort of taxes on it? This isnt income, obviously, but it is still cancelled debt and money which we got back from the vehicle. Edit: a wordAssistant: If you bought the car for 6k, and received 3k which is less than you paid, you have no gains to pay taxes on. However, just remember that you cant claim the loss either.Human: Even though we got more than the loan was worth at the end?  <response>: Yes. The value of the vehicle is based on its resale value, not on the loan balance. The insurance company paid you what they determined the vehicle was worth - several days ago you had an asset worth 3k, now you have 3k in cash because you insured it. Theres no income in that transaction. 