Tax Consequences of a Cancelled Debt:

[cana]

What is the name of your state? California

Last year, I settled about $2,500 worth of outstanding debts with two Credit Card companies.

What should I file in addition to Form 982?

At the Form 982 it asked me to reduce the capital loss carryover. However, there was no place in Schedule D to enter the $2,500 reduction of my capital loss carryover from the year 2003 and before(totalling about $5,000).

How should I reflect the change? According to a Nolo press book it said I have to complete up to Line 2, showing how much debt settlement amount should be exclded from income, and then stop.

I would like to know what to do next, or how to put the $2,500 to reduce my capital loss carryover (if I have to do so).

 

[KDBRitton]

Form 982

Read the instructions for the Form 982, page 3, part II regarding line 7...I dunno..but I didn't get the impression from your post that this was a business debt settlement..seems Form 982 is for business debt discharge?????

Personally....are there any benefits to reporting the reduction in debt?

 

[cana]

Answer:

>I didn't get the impression from your post that this was a business debt settlement..seems Form 982 is for business debt discharge?????

>Personally....are there any benefits to reporting the reduction in debt?


There are no benefits, but I did get the 1099s so I have to report it as income. However, if I file Form 982 I don't have to report it as income. I did find out that it can be used by bankrupt or insolvent people(like me).