Form 982 - Reduction Of Tax Attributes Due To Discharge Of Indebtedness (And Section 1082 Basis Adjustment) Page 2

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Form 982 (Rev. 1-2016)

Page

General Instructions

Purpose of Form

Generally, the amount by which you benefit from the discharge

Section references are to the Internal Revenue Code unless

of indebtedness is included in your gross income. However,

otherwise noted.

under certain circumstances described in section 108, you can

Future developments. For the latest information about

exclude the amount of discharged indebtedness from your

developments related to Form 982 and its instructions, such as

gross income.

legislation enacted after they were published, go to

You must file Form 982 to report the exclusion and the

reduction of certain tax attributes either dollar for dollar or 33

cents per dollar (as explained below).

How To Complete the Form

IF the discharged debt

THEN follow these steps . . .

you are excluding is . . .

Qualified principal

1. Be sure to read the definition of qualified principal residence indebtedness in the instructions for line 1e on page

residence indebtedness

4. Part or all of your debt may not qualify for the exclusion on line 1e but may qualify for one of the other exclusions.

2. Check the box on line 1e.

3. Include on line 2 the amount of discharged qualified principal residence indebtedness that is excluded from gross

income. Any amount in excess of the excluded amount may result in taxable income. See Pub. 4681 for more

information. If you disposed of your residence, you may also be required to recognize a gain on its disposition. For

details, see Pub. 523, Selling Your Home.

4. If you continue to own your residence after the discharge, enter on line 10b the smaller of (a) the amount of

qualified principal residence indebtedness included on line 2 or (b) the basis (generally, your cost plus improvements)

of your principal residence.

If the discharge occurs in a title 11 case, you can’t check box 1e. You must check box 1a and complete

▲

the form as discussed below under A nonbusiness debt. If you are insolvent (and not in a title 11 case),

you can elect to follow the insolvency rules by checking box 1b instead of box 1e and completing the

form as discussed below under A nonbusiness debt.

CAUTION

A nonbusiness debt (other

Follow these instructions if you don’t have any of the tax attributes listed in Part II (other than a basis in

than qualified principal

nondepreciable property). Otherwise, follow the instructions for Any other debt below.

residence indebtedness,

1. Check the box on line 1a if the discharge was made in a title 11 case (see Definitions, later) or the box on line 1b if

such as a car loan or credit

the discharge occurred when you were insolvent (see Line 1b, later).

card debt)

2. Include on line 2 the amount of discharged nonbusiness debt that is excluded from gross income. If you were

insolvent, don’t include more than the excess of your liabilities over the fair market value of your assets.

3. Include on line 10a the smallest of (a) the basis of your nondepreciable property, (b) the amount of the

nonbusiness debt included on line 2, or (c) the excess of the aggregate bases of the property and the amount of

money you held immediately after the discharge over your aggregate liabilities immediately after the discharge.

Any other debt

Use Part I of Form 982 to indicate why any amount received from the discharge of indebtedness should be excluded

from gross income and the amount excluded.

Use Part II to report your reduction of tax attributes. The reduction must be made in the following order unless you

check the box on line 1d for qualified real property business indebtedness or make the election on line 5 to reduce

basis of depreciable property first.

1. Any net operating loss (NOL) for the tax year of the discharge (and any NOL carryover to that year) (dollar for

dollar);

2. Any general business credit carryover to or from the tax year of the discharge (33

cents per dollar);

3. Any minimum tax credit as of the beginning of the tax year immediately after the tax year of the discharge (33

cents per dollar);

4. Any net capital loss for the tax year of the discharge (and any capital loss carryover to that tax year) (dollar for

dollar);

5. The basis of property (dollar for dollar);

6. Any passive activity loss (dollar for dollar) and credit (33

cents per dollar) carryovers from the tax year of the

discharge; and

7. Any foreign tax credit carryover to or from the tax year of the discharge (33

cents per dollar).

Use Part III to exclude from gross income under section 1081(b) any amounts of income attributable to the transfer

of property described in that section.

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