Received 1099 C been discharged???

[MarieT]

If you were insolvent at the time the debt was forgiven you can avoid paying tax on it. You would use form 982, line 1b.

See IRS Publication 4681 for a worksheet to determine if you were insolvent by IRS definition.

Thanks...that is a good idea to go right to the IRS rules.

[missemo]

Thank you for all for posting your thought's about this topic. My CPA had my tax paper's ready to be picked up she checked box 1a on the 982 form????? I just have to have confidence that this is correct. I was going back and forth that the box 1b should be checked as I was insolvent BUT it is signed and stamped and no turning back now. I just hope no letter's come from the IRS. Then again if they need discharge paper's they can easily be porvided. Thank you again to all and keep up the good work.

[BCA2009]

Thank you for all for posting your thought's about this topic. My CPA had my tax paper's ready to be picked up she checked box 1a on the 982 form????? I just have to have confidence that this is correct. I was going back and forth that the box 1b should be checked as I was insolvent BUT it is signed and stamped and no turning back now. I just hope no letter's come from the IRS. Then again if they need discharge paper's they can easily be porvided. Thank you again to all and keep up the good work.

Line 1a is if you were discharged in BK. Line 1b would be if the debt was forgiven, but not discharged in BK (assuming you were insolvent at the time of foreclosure). There are several was to avoid the income depending on your individual circumstances.