Owe taxes on bankruptcy payments received?

[Daniel E.]

Hello,

I own one non-performing note. Chapter 11 plan was approved in early 2020. Do I need to report this income? Will I owe taxes?

UPB: $50k

Legal: $85k

2020 Pmts: $15k*

LLC costs related to note (force-placed insurance, legal bills, interest): $12k.

* the vast majority of the payments went to pay the costs of getting to an approved plan. Going forward, they will actually reduce my basis.