IRS · Official form

Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness

Form 982 is how you tell the IRS that canceled debt qualifies to be excluded from your income, for example because of bankruptcy or insolvency, and how you reduce tax attributes in exchange. Fill in the official IRS PDF below and download it.

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What is 982?

Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment), determines how much discharged debt can be excluded from gross income under section 108. Canceled debt is normally taxable income, but exclusions apply in situations such as bankruptcy, insolvency, qualified farm debt, and qualified real property business debt.

Excluding the income has a cost: the taxpayer generally must reduce tax attributes, such as net operating losses, credit carryovers, capital loss carryovers, and the basis of property. Part II of the form records those reductions.

Who files 982?

Taxpayers whose debt was discharged in a title 11 bankruptcy case
Taxpayers who were insolvent immediately before a debt was canceled
Farmers and real property businesses excluding qualified farm or qualified real property business debt
Anyone who received a Form 1099-C and qualifies for a section 108 exclusion

How to fill out 982

In Part I, check the box for the exclusion that applies, such as bankruptcy, insolvency, or qualified farm indebtedness, and enter the total amount of discharged debt you are excluding.
If you are electing to reduce the basis of depreciable property first, check that box and enter the amount.
In Part II, allocate the excluded amount against your tax attributes in the required order: losses, credits, and basis.
Complete Part III only if a section 1082 basis adjustment for corporations applies.
Download the finished PDF and attach it to your federal income tax return for the year the debt was discharged.

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Page 1 27 fields

Name shown on return

Identifying number

Amount excluded is due to (check applicable box (or boxes)): a. Discharge of indebtedness in a title 11 case.

Line 1b. Discharge of indebtedness to the extent insolvent (not in a title 11 case).

Line 1c. Discharge of qualified farm indebtedness.

Line 1d. Discharge of qualified real property business indebtedness.

Discharge of qualified principal residence indebtedness (Caution: see instructions before checking this box if debt was discharged after

Line 2. Total amount of discharged indebtedness excluded from gross income.

Do you elect to treat all real property described in section 1221(a)(1), relating to property held for sale to customers in the ordinary

Line 3. No.

For a discharge of qualified real property business indebtedness applied to reduce the basis of depreciable real property.

Line 5. That you elect under section 108(b)(5) to apply first to reduce the basis (under section 1017) of depreciable property.

Applied to reduce any net operating loss that occurred in the tax year of the discharge or carried over to the tax year of the discharge.

Line 7. Applied to reduce any general business credit carryover to or from the tax year of the discharge.

Line 8. Applied to reduce any minimum tax credit as of the beginning of the tax year immediately after the tax year of the discharge.

Applied to reduce any net capital loss for the tax year of the discharge, including any capital loss carryovers to the tax year of the

DO NOT use in the case of discharge of qualified farm indebtedness.

Line 10b. Applied to reduce the basis of your principal residence. Enter amount here ONLY if line 1e is checked.

Depreciable property used or held for use in a trade or business or for the production of income if not reduced on line 5.

Line 11b. Land used or held for use in a trade or business of farming.

Line 11c. Other property used or held for use in a trade or business or for the production of income.

Line 12. Applied to reduce any passive activity loss and credit carryovers from the tax year of the discharge.

Line 13. Applied to reduce any foreign tax credit carryover to or from the tax year of the discharge.

Under section 1081(b), the corporation named above has excluded $

Under section 1081(b), the corporation named above has excluded $[dollar amount] from its gross income for the tax year beginning (enter

and ending

You must attach a description of the transactions resulting in the nonrecognition of gain under section 1081.

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Frequently asked questions

I got a Form 1099-C. Do I automatically owe tax on it?

Not necessarily. Canceled debt is income unless an exclusion applies. If you were in bankruptcy or insolvent, or another section 108 exclusion fits, Form 982 is how you claim it. Otherwise the amount generally goes on your return as other income.

How do I show I was insolvent?

Insolvency means your total liabilities exceeded the fair market value of your total assets immediately before the discharge. The exclusion is limited to the amount of insolvency, and you should keep a worksheet of assets and liabilities as support.

What does reducing tax attributes actually mean?

In exchange for not paying tax on the canceled debt now, you give up future tax benefits: net operating losses, certain credits, capital loss carryovers, and property basis are reduced in the order the form prescribes.

Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness

What is 982?

Who files 982?

How to fill out 982

Quick fill 982 on this page

Frequently asked questions

Related forms

Form 1099-C, Cancellation of Debt

Form 1099-A, Acquisition or Abandonment of Secured Property

Form 1040, US Individual Income Tax Return