The 982 form your are referring to is for debt canceled to the extent of a taxpayer’s insolvency which is not treated as taxable income. Generally speaking, this means that if all of your liabilities
exceed the fair value of all of your assets
assets and retirement plans
), cancellation of indebtedness up to the amount by which you are insolvent is not taxable (once rendered solvent, the balance would be taxable).
Since the Partnership is a "pass through" entity, and you filed the bankruptcy on both the business and personal
side, there should be no difference when frilling the the 982 form .
I hope this helps.
Yes, you may certainly file a 982 to prove insolvency. You just need to check box 1a on the form (“Discharge
of indebtedness in a title 11 case” — “Title 11″ being the Bankruptcy Code, then list the amount discharged on line 2, and then list it again on Line 10a to reduce the basis in your property
However, a 1099C really shouldn't have been issued since you filed the bankruptcy.) The following list
• Debt discharged in bankruptcy is simply not income
for cancellation of indebtedness purposes.