Generating Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness in Lacerte

Form 982 is a direct input and output form and will only generate based on the entries on the Discharge of Indebtedness screen.  These entries won't flow to any other form.

Follow these steps to generate Form 982:

1. Go to the Discharge of Indebtedness for your return type:
   • Individual: Screen 62
   • Partnership: Screen 61
   • Corporate: Screen 75
   • S-Corporate: Screen 69
2. Select the Reason(s) for Exclusion under the Form 982 - General Information section (see the form instructions for more details):
   • Discharge of indebtedness in a title 11 case (Form 982, line 1a).
   • Discharge of indebtedness to the extent insolvent (Form 982, line 1b).
   • Discharge of qualified farm indebtedness (Form 982, line 1c).
   • Discharge of qualified real property business indebtedness (Form 982, line 1d).
   • Discharge of qualified principal residence indebtedness (Form 982, line 1e).
3. Lacerte will total the amounts entered in the fields below and enter the sum on Form 982, line 2, unless an amount is entered in the Total amount of discharged indebtedness excluded from gross income (see below) [O].
4. Select the box Treat 1221(a)(1) real property as if it were depreciable property (if applicable) (Form 982, line 3).
5. Complete all applicable fields under the Form 982 - Reduction Of Tax Attributes (Amounts Excluded) section:
   1. Enter the For discharge of qualified real property business indebtedness (Form 982, Part II, line 4).
   2. Enter the Under section 108(b)(5) to apply first to reduce basis (under section 1017) (Form 982, Part II, line 5).
   3. Enter the Applied to reduce any net operating loss (Form 982, Part II, line 6).
   4. Enter the Applied to reduce any general business credit carryover (Form 982, Part II, line 7).
   5. Enter the Applied to reduce any minimum tax credit (Form 982, Part II, line 8).
   6. Enter the Applied to reduce any net capital loss (Form 982, Part II, line 9).
   7. Enter the Applied to reduce the basis of nondepreciable and depreciable property (other than above) (Form 982, Part II, line 10a).
   8. Enter the Applied to reduce the basis or your principal residence (Form 982, Part II, line 10b).
   9. Enter the Depreciable property used in trade, or for production of income under the Qualified Farm Indebtedness subsection (Form 982, Part II, line 11a).
   10. Enter the Land used or held for use in trade or business under the Qualified Farm Indebtedness subsection (Form 982, Part II, line 11b).
   11. Enter the Other property used in trade, or for production of income under the Qualified Farm Indebtedness subsection (Form 982, Part II, line 11c).
   12. Enter the Applied to reduce passive loss and credit carryovers (Form 982, Part II, line 12).
   13. Enter the Applied to reduce foreign tax credit carryover (Form 982, Part II, line 13).
6. Scroll down to the Form 982 - Section 1017 Transactions section.
7. Hold down Ctrl+E and enter the Description of transactions resulting in the reduction in basis under section 1017 (Ctrl+E).
   • This entry will generate a statement for Form 982, Part II.

Generating Form 982, Part III Consent of Corporation to Adjustment of Basis of its Property Under Section 1082(a)(2)

1. In the corporate module go to Screen 75, Discharge of Indebtedness.
2. From the left sections menu, select Form 982 - Nonrecognition of Gain Under Section 1081.
3. Enter the Amount excluded from gross income under Section 1081(b).
4. Enter a description if applicable.

Also refer to Entering Form 1099-C with insolvency (Form 982) in Lacerte.

Form 982 Part I Line 1b Insolvency Worksheet

How do I create the Statement of Insolvency in the Lacerte program to support the Form 982, Part I, Line 1b?

From the form instructions:

Check the box on line 1b if the discharge of indebtedness occurred while you were insolvent.  You were insolvent to the extent that your liabilities exceeded the fair market value (FMV) of your assets immediately before the discharge.  For details and a worksheet to help calculate insolvency, see Pub 4681.

Lacerte does not create a insolvency worksheet or statement to support the Form 982, Part I, Line 1b.  If such an item is wanted it would have to be manually created in Screen 47, Notes.  Mark as a statement to have it efile with the return.

Publication 4681, page 8 has an insolvency worksheet that can be used as a guideline for the input in Screen 47.