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clarenceprice
New Member

We received a 1099-C due to bankruptcy. When do we fill in formation for form 982?

 
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NicoleU
New Member

We received a 1099-C due to bankruptcy. When do we fill in formation for form 982?

Under these circumstances and in order to file the Form 982, we generally recommend using the CD/Download version of TurboTax Deluxe or a higher edition. I notice that you are currently using our TurboTax online product.

Form 982 (Reduction of Tax Attributes Due to Discharge of Indebtedness) reports the amount of cancelled debt to excluded from taxable income. We'll automatically generate Form 982 if your cancelled debt is due to:

  • Cancellation of qualified principal residence indebtedness, aka mortgage debt relief;
  • Debt cancelled in a Title 11 bankruptcy;
  • Debt cancelled during insolvency (the amount exceeding your assets);
  • Cancellation of qualified farm or real property indebtedness.

In addition, you should have a 1099-C to report the amount of cancelled debt.

In order to the switch from online to CD/download. please see the following link: https://ttlc.intuit.com/questions/1901476-how-do-i-switch-from-turbotax-online-to-the-turbotax-softw...

Once you have done the above you can access the forms mode of your desktop program using these steps:

To switch to Forms Mode, open your return, and then click the Forms icon in the upper right corner of your screen (or choose Forms from the View menu at top).

The Federal Information Worksheet will display and all the forms in your return will be listed on the left side. Then click on Open Form and type in the search box: Form 982.

To make sure its excluded within your return, you will need to fill out the following forms:

  • Form 1099-C (Cancellation of Debt), fill out accordingly
  • Form 982, you will need to indicate the reason for the discharge within Part 1 General information and you will need to include an amount within Part II Reduction of Tax Attributes (accordingly to the reason)
  • Canceled Debt Worksheet (fill out the Part accordingly to your reason or exclusion)
    • Part III Gain or Loss from Foreclosure, Repossession, Abandonment, Short Sale
    • Part VI Exclusion for Bankruptcy
    • Part VII Exclusion for Qualified Principal Residence Debt
    • Part VIII Exclusion for Insolvency (must fill out the Statement of Insolvency)
    • Part XI Exclusion for Qualified Farm Debt
    • Part X Exclusion for Qualified Real Property Business Debt
    • Part XI Exclusion of Gain of Principal Residence (Section 121)
  • Then check Form 1040, look at Line 21 Other Income, should be 0.

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