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I received a 1099-c and I already received my refund. I

Customer Question
I received a 1099-c...

I received a 1099-c and I already received my refund. I understand I need to do an amended 1040x with 982.

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

HELOC from my 1st home, Code F, #5 yes, amount $54200

Accountant's Assistant: Is there anything else important you think the Accountant should know?

I stop paying this in 2009 and now they send this 1099-c

Submitted: 4 months ago.Category: Tax
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Answered in 3 minutes by:
3/21/2018
Tax Professional: Lev, Tax Advisor replied 4 months ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,137
Experience: Taxes, Immigration, Labor Relations
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You may only exclude that COD income (cancellation of debt) from gross income if you are insolvent.

So you will need to prepare an insolvency worksheet and keep it for your record.

Then - you may use form 982 to claim an insolvency exemption.

Please verify.

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Tax Professional: Lev, Tax Advisor replied 4 months ago

If you are insolvent - you may simply exclude the forgiven debt from your taxable income.

On form 982

- check the box 1(b) - Discharge of indebtedness to the extent insolvent (not in a title 11 case)

- list the amount to exclude on line 2.

It is very unlikely that anything in Part II is related to your situation - so leave it blank.

That will allow you not to report the amount of forgiven debt on your tax return and that should not affect you tax returns for following years.

.

To determine your insolvency - use the worksheet on the page 6 in this publication -

http://www.irs.gov/pub/irs-pdf/p4681.pdf
Use all amounts and values BEFORE the debt was forgiven.

You do not need to send the insolvency worksheet with your tax return and do not need to add any notes - you only need to attach a form 982.

You will keep the insolvency worksheet and all other supporting documents with your tax records in case you would be audited.

Let me know if you need any help.

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