If an exception applies, it can be claimed on Form 982
, available at http://www.
Partners that exclude COD income from gross income must file Form 982
, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment), with their tax return and reduce their tax attributes per the ordering rules of Sec.
- Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment)
Exhibit 3: Comparison of tax consequences of acquisition indebtedness in Example 3 Nonrecourse Recourse Total discharge treated as sale Yes No Partial sale and discharge of indebtedness (DOI) No Yes Recognize DOI of $1 No Yes Basis reduced by $2 million discharged No Yes Taxpayer files Form 982
No Yes Taxpayer files Schedule D Yes Yes Taxpayer recognizes loss on tax return No No
The election is made by filing Form 982
with the return [Treas.
Taxpayers must attach a copy of their federal return, including Form 982
, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment), with their state tax return.
Finally, if you want to claim the debt forgiveness exemption, download IRS Form 982
and attach it to your return for the year in which the debt was forgiven.
Taxpayers can claim the special exclusion by filling out Form 982
, Reduction of Tax Attributes Due to Discharge of Indebtedness, and attaching it to their federal income tax return for the year.
Other taxpayers disclosed COD exclusions on various other statements within the return rather than completing federal Form 982
Taxpayers should carefully review Forms 1099-C received from lenders and must attach the completed Form 982
to their Form 1040 to claim the mortgage debt exclusion.
Up to $2 million in forgiven mortgage debt from your principal residence can be excluded from your income by filing Form 982
with your income tax return.
A taxpayer who claims this exclusion must file Form 982
with the return.