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My parents filed bankruptcy on credit card debt and other…

My parents filed bankruptcy...

My parents filed bankruptcy on credit card debt and other debts. They did not file form 982. The credit card company sent them a 1099-C with code G. Can they just check Box 1A or do they need to fill out the insolvency information?

Accountant's Assistant: The Accountant will know how to help. Is there anything else important you think the Accountant should know?

This happened in 2106 and they just received a notice that they owed tax

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4/14/2018
Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 6,184
Experience: 20+ years of experience in tax preparation; 30+ years of experience as a real estate/corporate paralegal.
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Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

If they are trying to exclude the cancelled debt as income because of insolvency, they will have to complete the insolvency information.

Please let me know if I can assist you further.

Thank you and best regards,

Barb

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Customer reply replied 2 months ago
Can they just exclude it from income based on the fact that the debt was discharged in Chapter 7 Bankruptcy?

I apologize. I missed the bankruptcy in your initial question.

Yes.

Check 1a and enter the amount on Line 2.

No need for insolvency information.

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Customer reply replied 2 months ago
Thanks. Do you still need to call me? Do I have to pay for phone call?

Let me know if you still want a phone call.

I think we can resolve this here.

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Customer reply replied 2 months ago
Should I file Form 1040X with it? Or just send it with the letter?

Did the letter ask for a 1040X or just the 982 or was it just notification of tax owed?

Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 6,184
Experience: 20+ years of experience in tax preparation; 30+ years of experience as a real estate/corporate paralegal.
Verified
Barbara and 87 other Tax Specialists are ready to help you
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Customer reply replied 2 months ago
Notification of Tax owed

You need the 1040X and Form 982 attached to it.

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Customer reply replied 2 months ago
Thanks!

My pleasure!

Thank YOU for the positive rating of my answer and VERY GENEROUS BONUS. Both are very much appreciated!

Have a wonderful weekend!

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