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IRS Form 982: How to Fill it Right

Audrey Goodwin

2024-04-18 11:56:27 • Filed to: Other IRS Forms • Proven solutions

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.

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Instructions for How to Complete IRS Form 982

The form 982 is a 3 part form with a lot of checkboxes. It is easy to fill when compared to other IRS forms. With PDFelement, the filling process becomes a lot easier. To successfully fill the form, follow the step by step instructions below

Step 1: Obtain the form at the IRS website. Better still, you can download IRS Form 982 here and fill it electronically.

Step 2: Write your name and the identifying number in the column provided for both.

Step 3: First fill Part I- General Information. However, ensure you read the instructions properly before proceeding. From 1a to 1e are checkboxes, check the applicable boxes for the amount excluded due to the following reasons highlighted before the checkboxes. Check the box on line 1e and include on line 2 the amount of discharged qualified principal residence indebtedness that is excluded from gross income. Read to understand before checking the boxes. In Line 2, write the total amount of discharged indebtedness excluded from the gross income in the space provided. Finally, on part I, answer yes or no by checking the boxes for the question posed in No 3. Be sure you understand the question before answering.

Step 4: Fill out Part II- Reduction of Task Attributes. This part requires you to enter the amount excluded from gross income. It covers from No 4 to 13 and ensures that the amount entered in each case is the actual excluded amount from the gross income in each case. However, note that if you check any amount on line 1a through c, you can choose to complete line 5 to apply for all or a part of the debt discharge amount to first reduce the debit depreciable property. Also note that for line 7, it means that if you have a carryover of business credit from or to the tax year of the discharge, it is important to reduce the carryover by 33 and half cent for each dollar executed from the gross income.

Step 5: Complete part III- Consent of Corporation to Adjustment of Basis of its Property Under Section 1082. This section states the amount from its gross income from the tax year which begins and ends at a particular year. You are to fill the spaces with the amount, tax year beginning and tax year ending accordingly. Also fill in the state of incorporation of the corporation. However, note that consent to the request from the variation from the general rule will only be effective if it is incorporated in a closing agreement entered into by the corporation and the internal revenue.

Step 6: It is a requirement to attach a description of the transaction of the transaction resulting in the non recognition of gain under the section 1081.

Tips and Warnings for IRS Form 982

If the discharged debt you are excluding is a non business debt other than the qualified principal residence indebtedness such as car loan or grant, you must include on line 10 a, the smallest of either the basis of your non depreciable property, the amount of the non business debt included on line 2 or the excess of the aggregate basis of the property and the amount of money that was held by you after the discharge of your aggregate liabilities after the discharge.
Ensure all information supplied on the form is accurate and real. Do not misrepresent any fact as you will be liable for any mistakes or misrepresentation of facts in the Form 982. Ensure you understand the instructions clearly before filling the form.
It is also important to understand that the amount eligible of exclusion applies only to debt discharged after 2006. However, you can also not exclude from gross income discharge of qualified principal residence indebtedness if services performed for the lender was the reason for the discharge.
It is completely safe to use PDFelement to fill the IRS Form 982 as privacy of information is guaranteed.
You must attach the description of any transactions resulting in the reduction in basis under the section 1017. Check the instructions for part II for additional information in this regard.