Please somebody help me. I'm confuse with the 1099-C, if we use the whole amount of the form from box 2 on line 21 as other income(rental properties), then why we need the worksheet for and in what situations?
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Cancelled Debt
Cancelled debt is not taxable income if the debtor was insolvent immediately before the debt was cancelled.
The worksheet is used to determine whether the debtor was insolvent.
Insolvent = "liabilities exceed assets"
It can be a lot more complicated than this, especially if there are business entities or joint ownership involved.
Anyone who declares bankruptcy is, by definition, insolvent. But not everyone who is insolvent declares bankruptcy. You can be insolvent without being bankrupt.
BMKBurton M. Koss
koss@usakoss.net
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The map is not the territory...
and the instruction book is not the process.
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