At the last tax seminar attended, it was mentioned that in reguards to cancellation of credit card debt, the instructor felt anyone receiving such cancellation of debt was probably finanially insolvent and could use Form 982. This situation seems to come about more and more frequently. Anyone have any experience or information conserning this? This is my first post on the board and any and all replies will be much appreciated.
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Not necessarily, I had a client that had a credit card cancellation of debt. She was not insolvent when she listed her assets and liabilities. So the cancellation was taxable to her on line 21.
At the time I was sorry, but the client has a steady job and lots of assets, so I did seem fair in the final analysis to count it as taxable income. But, the client also appreciated the research. Actually reviewing the numbers made my client also appreciate that the tax was necessary.JG
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