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PDtax
PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 4472
Experience:  35 years tax experience, including four years at a Big 4 firm.
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In regards to the S Corp cancellation of debt question. Is

Customer Question

In regards ***** ***** S Corp cancellation of debt question. Is this income excludable?
Submitted: 1 year ago.
Category: Tax
Expert:  PDtax replied 1 year ago.
Hi again.Customerhere.It might be, depending on the 982 exclusions that might apply. Your specific situation will dictate.Use the 982 to test the s corp at date of discharge. The easiest exception might be insolvency, and if your s corp was worth negative $1,000,001 or more at discharge, the relief is tax free.Best to check with an insolvency tax pro for the support you will want to assemble. IRS is likely to look closely at a discharged family debt. Things like evidence of the debt, efforts to collect, etc. should be part of the file.
Customer
Customer: replied 1 year ago.
basically by marking yes on schedule b line 10 opens up a can of worms. What if father said you don't have to pay back?
Expert:  PDtax replied 1 year ago.
If the makeup of the debt is up in the air, I can assist, but we are going beyond the scope of your original question.I'll post an Offer to assist tomorrow.