If have a large NOL carry forward being applied each year on my 1040. Unfortunately I soon will need to apply for Chapter 7 bankruptcy to discharge my debts. For Federal Tax Return purposes does this discharged debt get taken against my NOL on my future 1040 returns?
Social Security Lawyers
Discharged debt is not reportable as income even though the general rule makes forgiven debt taxable as income. Find Form 982 at www.irs,gov and read the instructions for that form.
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Chapter 13 Bankruptcy Attorney
This is a question for a tax professional. The discharge may not directly affect the NOL. However, it may affect whether it will offset any losses and provide any tax benefit.