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jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3161
Experience:  I've prepared all types of taxes since 1987.
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Hello, I have a question about IRS form 982, line 10a. I checked

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Hello, I have a question about IRS form 982, line 10a. I checked line 1b. I was insolvent ($39475.00) immediately before the $6167 debt cancellation (credit card), and remain insolvent after. FMV of assets was $4715.00 immediately before the cancellation. I'm having a difficult time getting my head around what amount I should put on line 10a. I think it's -0-, but the language is so Greek to me I'm not sure.

Thank you for your time!



I can help for you deciding how to fill the form.


First, I am presuming that you have nothing on line 5.

That being so, then the amount excluded from income is applied on lines 6 through 13, in that order.


So, go down starting at line six and put the amount in for each line until the total you have put on the lines is the amount excluded (you said it was 6167 in your case).


What the line 10 instructions are saying is that you will not count as your cost (basis) amounts that you owe (liabilities) after the discharge of debt.

That is, if you were still insolvent after this particular debt was discharged then 10a is zero.

Since you said that before the discharge of 6167 you were at (39475) then you will have zero on 10a since you have zero when you take cost basis minus liabilities after the discharge.


When there is debt discharge the amount of income excluded reduces your cost basis (and so later increases gain on sale) or reduces other tax attributes.

If my liability is more than my cost than there is no cost basis to reduce and that particular line is zero.


Please ask if you need more discussion or clarification.

Thank you.



Customer: replied 3 years ago.

Thanks for the quick response! I do not have anything on line 5. I must have misinterpreted the instructions that seemed to indicate that with non-title 11 insolvency I only needed to worry about filling out line 10a.


Lines 6 - 13 don't seem to apply to my situation, so if I understand correctly I should include the $6167 on line 5 and line 10a would be -0-?


Thank you!

Hello again,


Line 5 is to make an election to change which item is reduced first. There should not be an amount on line 5 if there is not anything that will be reduced; and then you use lines 6 through 13 to reduce those attributes, if any.


It is possible to only have zero on all the lines 4-13 when you have none of those items.

From your description, as you stated, that seems to apply in your case - all zeros.


Forms do have to be designed to be used by taxpayers in many circumstances to it is not a problem for you having blank, or zero, on all those lines.


Hope that clarifies for you; but ask again if you need more help.

Thank you.



Customer: replied 3 years ago.

That definitely helps. Thank you so, so much!

You are quite welcome.


If you have another question, you can include my name in the question to direct it to me if you wish.


Thank you for the opportunity to be of service.

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