Cancellation of Debt

[Minvest]

Single client has $65k in income.

Client expects to get a 1099-C for cancellation of $25,000.00 in debt.

I did a sample tax return, entering $25K on line 2 (Amt. of debt discharged) on the 1099-C form.

Doing so increases client tax liability by approx. $4600.

I understand that using Form 982 will reduce client's liability. However, I'm unable to generate the  reduction....not sure what I need to fill out.

How do I use form 982 to reduce client's tax liability?

Thanks in advance,

Michael De Freitas

[IRonMaN]

You might want to start with reading the instructions to see if it applies to your situation:

form 982 - Google Search

[Just-Lisa-Now-]

Professional has a Canceled Debt Worksheet (that you link to from the 1099C worksheet) with an Insolvency section to complete (or Bankruptcy if thats the case), the amount of Insolvency will transfer to the 982 and reduce the taxable amount.

Id look for a similar worksheet in Basic.

[Minvest]

Thank you so much!!! That helped!!

[DTNY07]

I see it for Form 1099-C.  But not for Form 1099-A.  I am using Pro Series professional

Even if i override it on the Cancelled Debt worksheet, it doesn't flow to Form 982.  Nor does it remove it from income.

[Just-Lisa-Now-]

1099A is just an abandonment of property, so you may have a disposal of property to report, its not a cancelation of debt, so I dont think the 982 will generate for the 1099A, only the 1099C.