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Help on Form 982 - CH7 personal bankruptcy discharged; received 1099-C on credit debt.

Tampa, FL |

I have searched all over the web, read the IRS publications, and am still totally confused. I contacted my BK attorney and they said not to file the 982 form but everything I have read says to do it. I should not have received these forms as the COD was done after the BK discharge. I really have 2 questions:

1. I have 2 1099-C's totalling $28k, my AGI was $12k. I understand part 1 of the 982, I cant grasp part 2. What tax attributes am I supposed to reduce? I only have minor personal belongings as everything was liquidated in the CH7 discharge.

2. Should I include all of the debt discharged on the 982 even though I didnt receive 1099-C's for all? Or, do I wait to file another 982 if I receive more 1099-C's in subsequent years?

Thank you for your help - any help!!!

Thank you for your prompt reply. My apologies for not providing enough information. The details are as follows: The CH7 bankruptcy was filed 4/11/08 and discharged 8/6/08. The 1099-C's were for debt forgiveness from 2 credit card providers. The 1099-C's were both issued after the discharge date; 1099 dates of 8/16/08 and 08/21/08, respectively. These debts were included in the discharged creditors. No new debts have been incurred since the bankruptcy. The creditors who issued these 1099-C's were only a fraction of the total discharge of creditors. The 2 1099-C's I received add up to $28k; the total discharge of debt was $385k, including a primary residence. The primary residence was included, and discharged, in the bankruptcy. However, the foreclosure is still not finalized. I hope this helps. Thank you again for your time and advice!

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Attorney answers 2


There is not enough precise information. When was the Ch 7 filed and when was the discharge? Last week or a couple of years ago?

I am unclear as to whether your 1099's were issued for being paid as an independent contractor or as a pensioner, or whether your 1099's were issued for forgiveness of debt.

If for forgiveness of debt, was the debt forgiven before the bankruptcy petition? Or was it new debt after a bankruptcy discharge a few years ago, and you were forgiven of those post-discharge debts?


Many people receive these 1099s for 'discharge of indebtedness' income, but many are not required to claim it as income. There are two exceptions. Any debt discharged in a bankruptcy case is excepted from inclusion as income. Additionally, if you were 'insolvent' at the time, after the debt was forgiven, you do not have to include it as income. That means that, after the debt was forgiven, your debts still exceeded the value of your assets. I usually provide a letter for my clients along with the correct section of the 'bankruptcy tax guide', available off the IRS website. You may be able to find it on the net.

If you find the right part of the bankruptcy tax guide, copy it and forward it to the irs with the 1099 to tell them why it shouldn't be included as income.

As for properly preparing form 982, I would normally seek the advice of a CPA or an attorney with actual experience in the area.

But, the bottom line for your fact pattern is that the debt that was the subject of the 1099-C was discharged in your bankruptcy case, and therefore it is NOT includable as income - period. I wouldn't wait to see if any other 1099's came later, the IRS would expect this to be included as income unless you take some afffirmative action.

Once again, if unclear about preparation of the form, see a CPA with actual knowledge of this area.