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Debt Relief – Insolvency – Bankruptcy Information » Entries tagged with "Indebtedness"

IRS form 982 line 10a “basis” Reduction & Attributes Due to Discharge of Indebtedness?

Example: 4 personal credit card loans settled within weeks of each other with a total forgiveness of approx $45K. Insolvent (total assets less total liabilities) by $ 82K (negative) 1 day before and still insolvent by no less than $52K (negative) after any of the forgiven debts. Checked box 1b and entered $45K on line 2. What do you need to calculate for line 10a in Part 2 since the degree of insolvency is still greater than the forgiven debt before and after? What is done with the value for line 10a? Is it advantageous to have a larger value or smaller value on line 10a in relation to the amount of forgiven debt? … Read entire article »

Filed under: Insolvency

Tax question about Form 982 – Reduction of Tax Attributes Due to Discharge of Indebtedness?

Could someone please explain line 10a? Line 10a. In the case of a title 11 case or insolvency (except when an election under section 108(b)(5) is made), the reduction in basis is limited to the aggregate of the basis of your property immediately after the discharge over the aggregate of your liabilities immediately after the discharge. (what does all that goop mean?) Also, what does it mean below by (other than qualified principal residence indebtedness) ? A nonbusiness debt (other than qualified principal residence indebtedness, such as a car loan or credit card debt) I had a Credit card cancel debt and two mortgages, one mortgage was a second mortgage on my main house, the other was a second mortgage on a rental. Any help with filling out this form is appreciated. … Read entire article »

Filed under: Insolvency

Discharge of Indebtedness Supporting documents?

Good day, Everyone! Two days ago, my husband received a CP501 notice from the IRS indicating that hubby has some unpaid taxes due to a discharge of Indebtedness in 2008 that hubby didn’t report as a taxable income(because he didn’t know that he had to report it plus no form 1099c was forwarded to him from the bank). Now, I research about it and found out that the amout discharged can be claimed by him as an exclusion because we were insolvent then. We tried to fill out form 982, checked Part I 1b and filled the amount on Line 2 and PartII 10a. Now our main concern is, we tried our best to recall the the amount he owned and owed then to determine his insolvency status(thru the insolvency worksheet). … Read entire article »

Filed under: Insolvency

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