My personal copy of TurboTax (Home and Business 2010) has form 982 and reports that it handles it properly. I haven't checked, in detail.
It's checkmark 1b (insolvancy), not checkmark 1a (Chapter 11).
There seems to be a PLR on point that 1d would also apply to your situation, but it would have to be on a timely return. In that case, you can only exclude the amount corresponding to the adjustment
of your remaining basis in the structure.
It should be noted that, if the interest
of the debt is deductible
on your schedule E
, then the 1099-C entry should be reported on your schedule E, rather than as miscellaneous income. This may make a difference if you have a deferred rental loss, or if you have other passive losses.
If, as is likely, your copy of TurboTax handles the 1099-C "correctly" by putting it into miscellaneous income, you need to back that out, regardless of any exclusion reported on form 982. Hence, you need to modify other lines of the tax return. If you force TT to attach an itemized statement for line 21, the IRS should be able to see what you're doing. You also need to make sure that any adjustments reported on lines 4-13 of form 982 are reported on the appropriate lines of the return; for example, an adjustment on form 982 line 9 needs to be reported on Schedule D