How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Stephen G. Your Own Question

Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 4020
Experience:  Extensive Experience with Tax, Financial & Estate Issues
Type Your Tax Question Here...
Stephen G. is online now
A new question is answered every 9 seconds

Hi, Ive read form 982 instructions and publication 4681 many

Resolved Question:

Hi,
I’ve read form 982 instructions and publication 4681 many times and I get more and more confused.
I need an exact answer to my question how to fill it out in my situation, and which I am explaining in detail my situation:
Rental 2-bedroom apartment (never been principal residence) was foreclosed last year after 3 years of abandonment (3 years with no renters either). The lender sent me 1099-c with $114K of cancelled debt, it is a recourse loan. I checked my insolvency worksheet and my debt exceeds my assets by more then 114K which qualify me for full amount of debt discharge.
Now
1) Which line do I choose 1a (insolvency) or 1d (rental property indebtedness). Does my ex non-principal apartment mortgage debt must be treated as “Indebtedness that is incurred in connection with real property used in trade or business”?

2) Should I fill part II? And if it is then which line?

3) What is this attachment of description of any transactions resulting in reduction in basis” means?

Please only answer me if you are experienced in this topic, it is very serious for me.
Submitted: 3 years ago.
Category: Tax
Expert:  Stephen G. replied 3 years ago.

Stephen E. Grizey :

Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything you don't understand.

Stephen E. Grizey :

You use insolvency. One rental property does not constitute a trade or business nor was the indebtedness incurred in connection with real property used in any other business of yours; this would be like if you owned an office building or commercial building/warehouse that housed your trade or business.

Customer:

Hi, Stephenplease let me know as

Customer:

for my other questions.

Stephen E. Grizey :

Once you use the insolvency exception, they don't apply.

Customer:

I don't need to fill out part II?

Stephen E. Grizey :

No part II, No basis adjustment; you don't continue to own the property.

Customer:

what about some statement that i need to attach?

Stephen E. Grizey :

The worksheet to assist you in determining insolvency doesn't have to be filed.

Stephen E. Grizey :

Part I line 1(b) is the insolvency line;

Stephen E. Grizey :

1(a) is for bankruptcy

Customer:

Have you ever helped file taxes with the same cituation and it went through and accepted. Please be honest I am terrified of IRS :)

Stephen E. Grizey :

Of course, we have a lot of insolvency cases here. The fact that they go through means nothing to any particular case. Those other sections couldn't possibly apply to you, so for you to understand it is just a process of elimination.

Customer:

And if I am being audited what should I have ready?

Stephen E. Grizey :

Your worksheet computing insolvency

Customer:

And waht back up to this spreadsheet, most items just an estimation.

Stephen E. Grizey :

Chances of being audited for this situation are somewhere between slim & none. The IRS is getting literally millions of Form 982.

Customer:

Last question: in line 3 what should I answer?

Stephen E. Grizey :

No. It actually is "not applicable" but put No. I'd put N/A next to the No.

Customer:

Thank you very much!

Stephen E. Grizey :

U R Welcome

Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 4020
Experience: Extensive Experience with Tax, Financial & Estate Issues
Stephen G. and 6 other Tax Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.