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Old 07-29-2015, 07:20 AM
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Question about Form 982

I am insolvent for 2014. I had $16,000 in credit card debt that was discharged, and $5,000 in assets. I'm not sure how to fill out Form 982.

I tried to link it to a graphic of Form 982 but I dont think I have those permissions.

For question #2, do I put the $16,000?
I have no land or farm assets.
Where do I put the $5,000 in assets?

Thank you for any suggestions.



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Old 07-29-2015, 07:22 AM
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I just saw another post about Form 982 here, I think that should answer my questions. I would post a link to that but I dont have those permissions. Thank you.



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Old 07-30-2015, 05:14 AM
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I am insolvent for 2014. I had $16,000 in credit card debt that was discharged, and $5,000 in assets. I'm not sure how to fill out Form 982.======>>Basically, aslongas you borrow money and the lender later cancels / forgives the credit card debt, you may have to include the cancelled amount in income for tax purposes, depending on the circumstances. When you borrowed the money you were not required to include the loan proceeds in income because you had an obligation to repay the lender. When that obligation is subsequently forgiven, the amount you received as loan proceeds is normally reportable as income because you no longer have an obligation to repay the lender. The lender is usually required to report the amount of the canceled debt to you and the IRS on a Form 1099-C.However, cancellation of Debt income is NOT always taxable; if you are insolvent when the credit card debt is cancelled, some or all of the cancelled debt may not be taxable to you. You are insolvent when your total debts are more than the fair market value of your total assets. You can only exclude it up to the amount of your insolvency; say, you have $16k of forgiven debt income, you have total assets valued at $50k and liabilities totaling $53k just before the credit card debt was canceled, your finances were under water by $3k($53K>$50K). The $16k canceled debt income would be reduced by the $3k insolvency. Only the remaining $13K in forgiven debt would be reported on the tax return as income on 1040 line 21. If you were insolvent by $5K or more, then all of the canceled debt income of $16K would be exempt from taxation.




For question #2, do I put the $16,000?
I have no land or farm assets.
Where do I put the $5,000 in assets====>>form 982 applies to credit card debt as you filed for bankruptcy /declared insolvency;the insolvency exclusion does not apply to any discharge occurring in a title 11 case. You need to check box 1b / 2 unless the insolvency occurs in a title 11 case. On line 2 the amount of discharged nonbusiness debt that is excluded from gross income.Since you were insolvent, do not include more than the excess of your liabilities over the fair market value of your assets. Include on line 10a the smallest of (a) the basis of your nondepreciable property, (b) the amount of the nonbusiness debt included on line 2, or (c) the excess of the aggregate bases of the property and the amount of money you held immediately after the discharge over your aggregate liabilities immediately after the discharge.Say, you were released from your obligation to pay your credit card debt in the amount of $5K. The FMV of your total assets immediately before the discharge was $7K and your liabilities were $10K. You were insolvent to the extent of $3K ($10Kof total liabilities minus $7K of total assets). The you need to check the box on line 1b and include $3K on line 2. Your assets are everything that you own, including cash in the bank, home, car, furniture and household effects, clothing, or etc;when you figure asset values you use what you could sell the item for today. The FMV of your home, the low blue book on your car, and maybe 10% of the new cost of clothing unless you have a closet full of designer originals in season.
I guess you need some professional help form an IRSEA/ a CPAon the form 982.



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