Have a Tax Question? Ask a Tax Expert
Good morning. Was your cancellation due to the forgiveness of debt on your principal residence? How much was the amount of the forgiveness on your 1099-C? Thank you!
This is an insolvency case. The for 982 clearly staes the amount excludible from taxable income due to insolvency. In other words, if the assets are less than the indebtness reported, then you can exlucde them from income. However, when I fill out the form 982, it does not reflect on page 1 of 1040 to offset the effect of 1099-C
which is in the Mis. income section. If this was a resdential property, it would not be a problem because there is exclusion for principal residence right after the 1099-C box.
Sorry for the delay. When you fill out the Form 982, you simply fill complete Line 1b and Line 2. Then that is the amount excluded from income. You simply exclude that amount from being reported in income on your 1040 income line so you do not have to deduct it somewhere else. Form 982 simply justifies why you did not include the 1099 amount in the income line.
I hope this has given you the guidance you were seeking. I wish you the best of luck!
If you have a follow-up question, please remember that there might be a delay between your follow up questions and my answers because I may be helping other clients or taking a break.
If I have adequately answered your question, even though the answer might not have been the one for which you hoped, I would appreciate it if you would please click the GREEN ACCEPT button so that I receive credit for my work; otherwise, though you have made a deposit, I do not receive credit.
If you need additional clarification on this question after clicking ACCEPT, please do not hesitate to click Reply and I will be happy to do what I can to help you further. Thanks for allowing me to be of service to you.
The information given here is not legal advice. As all states have different intricacies in their laws, the information given is general only. This communication does not establish an attorney-client relationship with you. I hope this answer has been helpful to you.
If 1099-C has been issued to a name and SS#, how would you not show that that has not been reported. The amount of 1099-C is $687,745. Wouldn't IRS send you a letter that you have not included this amount in your income. I think there must be a mechanism in 982 that would offset the 1099-C income in page 1 of 1040.!
You can include a note if you want, but that is what Form 982 is for...to specifically put the IRS on notice as to why it is excluded. Form 982 was designed specifically for this purpose.
This is what I came up with by calling the Le Ceret Software comany. The amount of indebtness has to be zeroed out by the the following action:
Let me know if this makes sense to you. Thanks,