You said this was unsecured debt, so I assume that this is debt you had from credit card companies or a similar creditor, but please confirm the source of the debt.
Also, are you trying to claim an exclusion on the taxes owed due to being insolvent?
Yes, the total unsecured debt is credit card debt and I am trying to clain the exclsion due to insolvency.
Incedentally, this occured in 2008 and I am attempting to respond to the cp2000 form I recieved showing that I under reported my income. I have never recieved the 1099C's or i would have delt with it when I filed my 2008 1040.
Hello again mtboat,
Thank you for the additional information.
To claim the insolvency exclusion, first check the box on line 1b of Form 982. On line 2, then enter the total amount of discharged debt which are excluding from your income, which in this case appears to be the $6,999 if that was the total of the two 1099-C forms.
On line 10a, also list the amount of $6,999.
Those are the only lines you need to fill out on this form.
You must also then attach a statement to the form to show how you determined that you were insolvent. This will basically be a listing of your assets and your liabilities as they were at the time this debt was discharged. Here is an example of what your statement should look like:
Car - $6,000 (fair market value)
Furniture - $1,000 (fair market value)
Cash in bank - $500
Total assets: $7,500
Credit card debt: $35,000
Balance owed on car loan: $2,500
Total liabilities: $37,500
Using the above example, you are insolvent by the amount of $30,000, because that is the amount by which your liabilities exceed your assets. So you may exclude up to $30,000 of your canceled debt from taxable income. Since your canceled debt was only $6,999, you will be able to exclude the entire amount.
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Thank you mtboat
Thanks very much!
I have been struggling with this for over a week and have only a couple days left to get this in.
Thank you mtboat,
Glad this was of some help to you.