INFORMATION FOR… Form 982 is used to determine, under certain circumstances described in section 108, the amount of discharged indebtedness that can be excluded from gross income. None at this time.

Do you need to fill out Form 982 if you are insolvent?

Most people associate cancellation of debt with an insolvency scenario, but it is not always the case; if indeed insolvent, you simply need to provide some information to the IRS on the Form 982. But if your situation does not fall under the following categories then it will likely result in a higher tax bill.

What does discharge of indebtedness mean on IRS Form 982?

Discharge of Indebtedness. The term discharge of indebtedness conveys forgiveness of, or release from, an obligation to repay. File Form 982 with your federal income tax return for a year a discharge of indebtedness is excluded from your income under section 108 (a).

What is excluded from gross income on Form 982?

Include on line 2 the amount of discharged qualified principal residence indebtedness that is excluded from gross income. Any amount in excess of the excluded amount may result in taxable income. See Pub. 4681 for more information.

You must file Form 982 to report the exclusion and the reduction of certain tax attributes either dollar for dollar or 331/3 cents per dollar (as explained below). IF the discharged debt you are excluding is… THEN follow these steps…

Can you exclude discharged indebtedness on Form 982?

However, under certain circumstances described in section 108, you can exclude the amount of discharged indebtedness from your gross income. You must file Form 982 to report the exclusion and the reduction of certain tax attributes either dollar for dollar or 33 1 / 3 cents per dollar (as explained later).

What to check on Federal Form 982 if you are insolvent?

If you are insolvent (and not in a title 11 case), you can elect to follow the insolvency rules by checking box 1b instead of box 1e and completing the form as discussed below under A nonbusiness debt. Follow these instructions if you do not have any of the tax attributes listed in Part II (other than a basis in nondepreciable property).

How to reduce basis of depreciable property on Form 982?

Use Part II to report your reduction of tax attributes. The reduction must be made in the following order unless you check the box on line 1d for qualified real property business indebtedness or make the election on line 5 to reduce basis of depreciable property first.

How to enter Form 982 in TaxSlayer Pro?

To enter Form 982 in TaxSlayer Pro, from the Main Menu of the tax return (Form 1040) select: To indicate that canceled debt being passed through on Form K-1 (Form 1065) is being excluded pursuant to IRC section 108 (1), from the Main Menu of the tax return (Form 1040) select:

Do you have to file Form 982 when debt is discharged?

When an individual has a debt that has been discharged, the amount that was discharged is generally treated as taxable income to the individual. Under certain circumstances, this amount can be excluded from income, and therefore not taxed. In order to report the exclusion, the taxpayer must file Form 982 with their tax return.