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Frances,

I just had the EXACT same thing happen to me this morning: audit check informed me I was at 'medium' risk of an audit because I'd claimed debt reduction on my return, which I had NOT done.  Similarly, there was no Form 982 in my return.  I think you've identified the issue, i.e. that there's no 'neither' option with which to answer the question re: cancellation of debt(s).  I'm sorry you had such headaches trying to sort through the problem, but I'm 'glad' someone else had the same issues I did, as I was really tearing my hair out!  Let's hope TurboTax can correct the bug so others don't have the same frustrations.