Welcome to Just Answer. I am here to help you resolve your tax and finance concerns. Please feel free to ask anytime you need extra help.
The problem you are experiencing is common in that many individuals confuse the statutes pertaining to this matter. Insolvency provides an exclusion for personal residence indebtedness canceled. A rental property is not your personal residence but is instead a business property. Different rules apply here. Basically you will need to select the exclusion based on a reduced tax attribute (depreciable basis). It will reduce/eliminate the depreciation and may still leave a portion of the cancellation taxable. The following link will take you to IRS Publication 4681. The information to help you through this (with examples) begins on page 10. The Publication is too large to reproduce here but you may want to read all of it. It also has useful links scattered throughout the publication to assist you.
The problem with Turbo Tax on the 1099-C entry ("Miscellaneous Income") is I can enter the amount of debt cancelled; however, there is no Form 982 entry on the software; as such (based upon review of the community comments on the topic) I must paper file my return and provide the Form 982 with it "on my own" as is suggested by th Turbo Tax community.
So according to Publication 4681 I can exclude the canceled debt from my income based upon insolvency just prior to the cancellation of the debt...so to my original question; do I just file Form 982 check box 1(a) then in box 2 indicated the amount of total debt that was cancelled (as this is the smaller of the amount of debt that was cancelled vs. amount I was insolvent just prior to the debt being cancelled, and file it with my printed Turbo Tax return documents OR is there anything that I will need to enter on the Form 1040 regarding the 1099-C, as I know the IRS will have this on file and likely be looking for indication on my return...unfortunately Turbo tax does not provide the answer to this as far as I could find...Thanks