Part II of Form 982 refers to a reduction of tax attributes.
This means that when you exclude a cancelled debt from income you are not allowed to get an additional tax benefit from losses attributable to the debt, such as carryovers and net operating losses.
The instructions for Form 982 part II say:
"If you check any of the boxes on lines 1a through 1c, you can elect, by completing line 5, to apply all or a part of the debt discharge amount to ..."
If you are not intending to use any of those tax attributes, just don't check any boxes in Part II. Just complete Part I.
@Taylore1
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