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My son could not make his student loan payment so he did a…

Hi My son could not make...
Hi
My son could not make his student loan payment so he did a settlement with Great Lake.
He got a 1099-C for $28,857.26 this year for 2017. He thought that the settlement was it.
The event code says F by agreement. he has very little money and this will be more then he can afford. Someone told him to file a Form 982. Is that legal or not or is he stuck paying the tax?
Thanks
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Answered in 2 minutes by:
3/20/2018
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 18,390
Experience: 15years with H & R Block. Divisional leader, Instructor
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Claiming INSOLVENCY (that is most likely what the adviser meant by Form 982) is legal. A taxpayer is insolvent when his or her total liabilities exceed his or her total assets.

The forgiven debt may be excluded as income under the "insolvency" exclusion. Normally, a taxpayer is not required to include forgiven debts in income to the extent that the taxpayer is insolvent.

The "F" code on the 1099C just says they both agreed to this.

Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 18,390
Experience: 15years with H & R Block. Divisional leader, Instructor
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