Form 982

[Brian EA]

When would you use form 982?

[Koss]

Form 982

Cancellation of Debt (Form 1099-C).

Even if the taxpayer is not in bankruptcy, cancelled debt is generally not taxable income if the taxpayer was insolvent at the time the debt was cancelled. This is the case with most residential foreclosures, short sales, or deed in lieu of foreclosure cases. Also happens in a lot of cases where someone negotiates a settlement of a delinquent unsecured debt, such as a credit card or a large medical bill. ("Will you take 65 cents on the dollar?")

Form 982 is used, among other things, to address this issue.

BMK

[Brian EA]

Scenario 1:Taxpayer received 1099C from Credit Card Company or Bank

Scenario 2: Taxpayer has a short sale on a rental property. .

Scenario 3: Taxpayer abandoned rental property.

On all of the above scenarios Taxpayer is not insolvent.

Does the taxpayer need to file form 982?

thanks

[Gary2]

Scenario 1:Taxpayer received 1099C from Credit Card Company or Bank

Scenario 2: Taxpayer has a short sale on a rental property. .

Scenario 3: Taxpayer abandoned rental property.

On all of the above scenarios Taxpayer is not insolvent.

Does the taxpayer need to file form 982?

Form 982 is never required. It's used to exclude any of the canceled debt from income. If none of the exclusions apply, then just report the income on line 21 and omit the 982.