Form 982 – Reduction of Tax Attributes 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.
- The IRS Form 982 is the reduction of Tax Attributes Due to the Discharge of Indebtedness. This form is used to determine under the circumstances described in section 108 the amount of discharged indebtedness that can be excluded from a person’s gross income.
What are examples of tax attributes?
There are seven tax attributes, listed in a specific order. They are: net operating loss from any business; business credit carryovers; minimum tax credit; capital losses; the basis of property; passive activity loss and credit carryover; and foreign tax credits.
What is meant by tax attributes?
Tax attribute refers to certain losses, tax credits, and the adjusted basis of property that must be reduced because of the exclusion of debt cancellation from a taxpayer’s gross income. Tax attributes are adjusted when a taxpayer is insolvent or declares bankruptcy.
What is tax reduction attributes?
” Tax attributes include the basis of certain assets and the losses and credits listed next. By reducing these tax attributes, tax on the canceled debt is in part postponed instead of being entirely forgiven. This prevents an excessive tax benefit from the debt cancellation.
Can I file Form 982 electronically?
The easiest way to find/file form 982 in TurboTax Online is to go to: Sign into TurboTax Online and click “Take me to my return.” (if not already open.) Once you are in your return on the left-hand side of the TurboTax Online screen click on TAX TOOLS and then TOOLS.
What qualifies as insolvency?
Insolvency is a state of financial distress in which a business or person is unable to pay their bills. It can lead to insolvency proceedings, in which legal action will be taken against the insolvent person or entity, and assets may be liquidated to pay off outstanding debts.
What are the essential characteristics of tax?
– Taxation involves, and a tax constitutes, s charge or burden imposed to government, the administration of the law, or the payment of public expenses. Revenues derived from taxes cannot be used for purely private purposes or for the exclusive benefit of private persons.
What are the different types of income?
TYPES OF INCOME
- Wages. This is income you earn from a job, where you are paid an hourly rate to complete set tasks.
- Salary. Similar to wages, this is money you earn from a job.
- Selling something you create or own.
- Allowance/Pocket Money.
What are the examples of income?
12 Examples of Income
- Labour. A salary or wage that is paid in return for work.
- Business Profits. The net income of a business that creates and captures value.
- Tangible Assets.
- Intangible Assets.
- Capital Gains.
- Rent Seeking.
What is a 982 tax form?
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.
Which cancellation of debt exclusion requires Form 982?
Form 1099- C – Cancellation of Debt / Form 982 – Reduction of Tax Attributes. When a taxpayer takes out a loan, the loan proceeds aren’t included in the taxpayer’s income since they aren’t income; they are a debt, and the taxpayer is obligated to repay the lender.
How do I avoid paying taxes on a 1099 C?
To establish your right to exclude the money shown on the 1099, you have to file IRS form 982. If you don’t file the form and claim the exception, the IRS has no way to know that, despite the debt forgiveness, there is no tax payable.
Can I file Form 982 with TurboTax?
You will need to download the TurboTax Deluxe program to your computer. Once it is downloaded, then you will have access to Form 982.
What is discharge of qualified principal residence indebtedness?
Qualified principal indebtedness includes any debt from acquiring, constructing, or improving a principal residence that is secured by the principal residence. A taxpayer can only have one principal residence at a time. This is generally the home where you live for the majority of the time.
Who can file for insolvency?
An individual can file an insolvency petition if he/she is unable to pay his/her debts on fulfilment of any of the following three conditions: Debts amount to more than Rs. 500. The individual is under arrest or imprisonment in the execution of a money decree.