Form 982

[Bjorn]

Facts:
Client is Insolvent and I put the 1099 C on line 21 and then entered another line below that saying insolve at time of 1099 C. I did not know about that form 982. The IRS is writing asking for form 982 for yera 2005.

For a typical over spender type credit card type what do you do on this form.
Is it as simple as checking Box 1b
and filling in the amount on line 2.

Surely there is more to it than this.

Mahalo

Bjorn

[superman]

Don't take a credit card

I would expect money up front and not accept a credit card for payment. I did not think that people overspent in the islands if you ran out of cash just sleep on the beach right?

Surf on dude or waterski barefoot at least!!

[taxmandan]

Prepare for audit

The form is easy, but you can count on the IRS challenging the insolvent claim and you will have to prove the facts. So, get a big fee (in cash) up front and all the documentation that will show that client was insolvent. Bank statements, loans, list of assets, etc. on the day of the insolvency. The IRS will disallow it and then you get to go to Appeals and try to get it accepted.