Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.
According to PLR(NNN) NNN-NNNN--- "the determination of a taxpayer's entitlement to the insolvency exclusion under section 108(a)(1)(B) is based on all the assets reachable by the individual
taxpayer's creditors. The filing
of a joint return
, pursuant to section 6013(b) of the Code, does not affect whether a spouse's separate assets will be used to determine the insolvency of the taxpayer."
So, she can still file the 982 by herself with her own assets, so if she is personally insolvent she would be able to exclude the cancellation of debt income
from her income. However, her interest
in joint assets would be counted as her assets, as would her interest in joint liabilities.
No need to file a separate return.
Please let me know if you need anything additional. Thanks again for using JustAnswer.com and have a great day.
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You should be aware that your question, as with most tax questions, can never really be answered completely...addressing all the permutations; that is because of the many assumptions that have to be made I have done my best to determine what I think you are asking and answering it in the most direct and understandable manner possible. If, however, after reviewing the questions, you have any uncertainties or further questions, please do not hesitate to ask.