The magic of Form 982 and cancellation of debt “income.”

Written by: leonora  |  Published on: February 10th, 2009  |  Category: Blog

Recently a few of my bankruptcy clients received their 1099-C forms from creditors whose debt was discharged in bankruptcy. While outside of bankruptcy cancellation of debt could lead to tax implications, debts discharged in bankruptcy should not. However, the fastest way to deal with the problem is to file Form 982 along with your tax return and mark box 1a.

This same form can help people who are facing cancellation of debt “income” if they can show that they were insolvent at the time this income was incurred.

Note, I am not a tax professional and  this is not meant to substitute for competent advice by a tax professional. Further, this does not create an attorney-client relationship between the author and reader.

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We help people file for bankruptcy, in addition to other legal services. As such, we are designated a debt relief agency by the U.S. Bankruptcy Code.This site is for general informational purposes only. Nothing on this site is legal advice. No attorney-client relationship is created until a written agreement is entered into and signed by you and Leonora Gorelik. Law Offices of Leonora Gorelik 3835 Hayvenhurst Ave. Encino, CA 91436