File your Taxes for Free!
  • Get your maximum refund*
  • 100% accurate calculations guaranteed*

TurboTax Federal Free Edition - File Taxes Online

Don't let filing your taxes get you down! We'll help make it as easy as possible. With e-file and direct deposit, there's no faster way to get your refund!

Approved TurboTax Affiliate Site. TurboTax and TurboTax Online, among others, are registered trademarks and/or service marks of Intuit Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.


© 2012 - 2018 All rights reserved.

This is an Approved TurboTax Affiliate site. TurboTax and TurboTax Online, among other are registered trademarks and/or service marks of Intuit, Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.
When discussing "Free e-file", note that state e-file is an additional fee. E-file fees do not apply to New York state returns. Prices are subject to change without notice. E-file and get your refund faster
*If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
*Maximum Refund Guarantee - or Your Money Back: If you get a larger refund or smaller tax due from another tax preparation method, we'll refund the applicable TurboTax federal and/or state purchase price paid. TurboTax Federal Free Edition customers are entitled to payment of $14.99 and a refund of your state purchase price paid. Claims must be submitted within sixty (60) days of your TurboTax filing date and no later than 6/15/14. E-file, Audit Defense, Professional Review, Refund Transfer and technical support fees are excluded. This guarantee cannot be combined with the TurboTax Satisfaction (Easy) Guarantee. *We're so confident your return will be done right, we guarantee it. Accurate calculations guaranteed. If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
https://turbotax.intuit.com/corp/guarantees.jsp

2011 Tax Return Form

How Far Back Can I Amend My TaxesHow Do I Ammend A Tax Return1040 Ez Instructions 2012File State Returns For FreeH&r Block Military TaxesFree E-file State Taxes OnlyEz TaxCan I File My 2012 Taxes With My 2013 TaxesVita Free Tax HelpBlank 1040ez FormEfile Tax Return For FreeTurbotax 1040ezHow To Amend Tax Return 20132010 Form 1040aEz Tax ReturnH&r Block Free Federal Tax ReturnWww Irs Gov 1040x InstructionsIrs Amendment FormFile 2011 Tax Return OnlineIncome Tax Preparation FeesAmend TaxesWww H&rblock ComFiling Income Tax ReturnFile Taxes Online For FreeHow Do I File An Amendment To My TaxesTurbotax Amended Return 2012Income Tax Software 2012Turbotax Premier Federal E File State 2012Free Filing For State TaxesFree Federal And State Tax FilingFree State Income Tax PreparationWhere Do I Get State Tax FormsIrs Forms 1040ezFile 2011 State Taxes Online FreeFree Tax Services2010 Tax Tables FederalFree State Tax Return FormsDidnt File 2012 TaxesH&r Block Free State FileCan I File 2011 Taxes In 2013

2011 Tax Return Form

2011 tax return form Index A Adjusted basis: Adoption tax benefits, Adoption Tax Benefits Assessment for local improvements, Assessments for Local Improvements Canceled debt, Canceled Debt Excluded From Income Casualty and theft losses, Casualties and Thefts Credit for qualified electric vehicles, Vehicle Credits Decreases to, Decreases to Basis Depreciation, Depreciation Easements, Easements Employer-provided child care, Employer-Provided Child Care Example, Adjustments to Basis Example Gain from sale of home, Postponed Gain From Sale of Home Gas-guzzler tax, Gas-Guzzler Tax Increases to, Increases to Basis Section 179 deduction, Section 179 Deduction Subsidies for energy conservation, Exclusion of Subsidies for Energy Conservation Measures Adoption tax benefits, Adoption Tax Benefits Allocating basis, Allocating the Basis Assistance (see Tax help) Assumption of mortgage, Assumption of mortgage. 2011 tax return form B Business acquired, Trade or Business Acquired Business assets, Business Assets Businesses exchanged, Exchange of business property. 2011 tax return form C Canceled debt, Canceled Debt Excluded From Income Casualty and theft losses, Casualties and Thefts Change to business use, Property Changed to Business or Rental Use Community property, Community Property Constructing assets, Constructing assets. 2011 tax return form Copyrights, Copyrights. 2011 tax return form Cost basis: Allocating basis, Allocating the Basis Assumption of mortgage, Assumption of mortgage. 2011 tax return form Capitalized costs, Activities subject to the rules. 2011 tax return form , Deducting vs. 2011 tax return form Capitalizing Costs Loans, low or no interest, Loans with low or no interest. 2011 tax return form Real estate taxes, Real estate taxes. 2011 tax return form Real property, Real Property Settlement costs (fees), Settlement costs. 2011 tax return form D Decreases to basis, Decreases to Basis Demolition of building, Demolition of building. 2011 tax return form Depreciation, Depreciation E Easements, Easements Employer-provided child care, Employer-Provided Child Care Exchanges: Involuntary, Involuntary Conversions Like-kind, Like-Kind Exchanges Nontaxable, Nontaxable Exchanges Partial business use of property, Partial Business Use of Property Taxable, Taxable Exchanges F Fair market value, Fair market value (FMV). 2011 tax return form Franchises, Franchises, trademarks, and trade names. 2011 tax return form Free tax services, How To Get Tax Help G Gain from sale of home, Postponed Gain From Sale of Home Gifts, property received, Property Received as a Gift Group of assets acquired, Group of Assets Acquired H Help (see Tax help) I Inherited property, Inherited Property Intangible assets, Intangible Assets Involuntary exchanges, Involuntary Conversions L Land and buildings, Land and Buildings Loans, low or no interest, Loans with low or no interest. 2011 tax return form M More information (see Tax help) N Nontaxable exchanges: Like-kind, Like-Kind Exchanges Partial, Partially Nontaxable Exchange P Partially nontaxable exchanges, Partially Nontaxable Exchange Patents, Patents. 2011 tax return form Points, Points. 2011 tax return form Property changed to business use, Property Changed to Business or Rental Use Property received as a gift, Property Received as a Gift Property received for services: Bargain purchases, Bargain Purchases Fair market value, Property Received for Services Restricted property, Restricted Property Property transferred from a spouse, Property Transferred From a Spouse Publications (see Tax help) R Real estate taxes, Real estate taxes. 2011 tax return form Real property, Real Property S Settlement costs (fees), Settlement costs. 2011 tax return form Special-use valuation, Special-use valuation. 2011 tax return form Spouse, property transferred from, Property Transferred From a Spouse Stocks and bonds, Stocks and Bonds Subdivided lots, Subdivided lots. 2011 tax return form T Tax help, How To Get Tax Help Taxable exchanges, Taxable Exchanges Taxpayer Advocate, Contacting your Taxpayer Advocate. 2011 tax return form Trade or business acquired, Trade or Business Acquired Trademarks and trade  names, Franchises, trademarks, and trade names. 2011 tax return form Trading property (see Exchanges), Taxable Exchanges TTY/TDD information, How To Get Tax Help U Uniform capitalization rules: Activities subject to the rules, Activities subject to the rules. 2011 tax return form Exceptions, Exceptions. 2011 tax return form Prev  Up     Home   More Online Publications
Print - Click this link to Print this page

Accessible Forms & Publications

The Internal Revenue Service offers content in a variety of file formats to accommodate people who use assistive technology such as screen reading software, refreshable Braille displays, and voice recognition software. We have prepared hundreds of tax forms and publications that can be downloaded or viewed online in text-only, Braille ready files, browser-friendly HTML, accessible PDF, and large print.  

 

To download these files, use the following links:

Helpful Links

Check out the new English/ASL video on the IRS YouTube Channel and meet Lex, the Tax Time canine. Lex introduces the terrific online services available for people with disabilities. Select the video link and then select the  "Leave IRS Site" link to start the video.

We welcome your comments. Please contact us with any comments, questions, and suggestions. To leave a comment, go to our comments page.

Page Last Reviewed or Updated: 04-Sep-2013

The 2011 Tax Return Form

2011 tax return form 4. 2011 tax return form   Detailed Examples Table of Contents These examples use actual forms to help you prepare your income tax return. 2011 tax return form However, the information shown on the filled-in forms is not from any actual person or scenario. 2011 tax return form Example 1—Mortgage loan modification. 2011 tax return form    In 2007, Nancy Oak bought a main home for $435,000. 2011 tax return form Nancy took out a $420,000 mortgage loan to buy the home and made a down payment of $15,000. 2011 tax return form The loan was secured by the home. 2011 tax return form The mortgage loan was a recourse debt, meaning that Nancy was personally liable for the debt. 2011 tax return form In 2008, Nancy took out a second mortgage loan (also a recourse debt) in the amount of $30,000 that was used to substantially improve her kitchen. 2011 tax return form    In 2011, when the outstanding principal of the first and second mortgage loans was $440,000, Nancy refinanced the two recourse loans into one recourse loan in the amount of $475,000. 2011 tax return form The FMV of Nancy's home at the time of the refinancing was $500,000. 2011 tax return form Nancy used the additional $35,000 debt ($475,000 new mortgage loan minus $440,000 outstanding principal of Nancy's first and second mortgage loans immediately before the refinancing) to pay off personal credit cards and to pay college tuition for her son. 2011 tax return form After the refinancing, Nancy has qualified principal residence indebtedness in the amount of $440,000 because the refinanced debt is qualified principal residence indebtedness only to the extent the amount of debt is not more than the old mortgage principal just before the refinancing. 2011 tax return form   In 2013, Nancy was unable to make her mortgage loan payments. 2011 tax return form On August 31, 2013, when the outstanding balance of her refinanced mortgage loan was still $475,000 and the FMV of the property was $425,000, Nancy's bank agreed to a loan modification (a “workout”) that resulted in a $40,000 reduction in the principal balance of her loan. 2011 tax return form Nancy was neither insolvent nor in bankruptcy at the time of the loan modification. 2011 tax return form   Nancy received a 2013 Form 1099-C from her bank in January 2014 showing canceled debt of $40,000 in box 2. 2011 tax return form Identifiable event code "F" appears in box 6. 2011 tax return form This box shows the reason the creditor has filed Form 1099-C. 2011 tax return form To determine if she must include the canceled debt in her income, Nancy must determine whether she meets any of the exceptions or exclusions that apply to canceled debts. 2011 tax return form Nancy determines that the only exception or exclusion that applies to her is the qualified principal residence indebtedness exclusion. 2011 tax return form   Next, Nancy determines the amount, if any, of the $40,000 of canceled debt that was qualified principal residence indebtedness. 2011 tax return form Although Nancy has $440,000 of qualified principal residence indebtedness, part of her loan ($35,000) was not qualified principal residence indebtedness because it was used to pay off personal credit cards and college tuition for her son. 2011 tax return form Applying the ordering rule, the qualified principal residence indebtedness exclusion applies only to the extent the amount canceled is more than the amount of the debt (immediately before the cancellation) that is not qualified principal residence indebtedness. 2011 tax return form Thus, Nancy can exclude only $5,000 of the canceled debt as qualified principal residence indebtedness ($40,000 amount canceled minus $35,000 nonqualified debt). 2011 tax return form   Because Nancy does not meet any other exception or exclusion, she checks only the box on line 1e of Form 982 and enters $5,000 on line 2. 2011 tax return form Nancy must also enter $5,000 on line 10b and reduce the basis of her main home by the $5,000 she excluded from income, bringing the adjusted basis in her home to $460,000 ($435,000 purchase price plus $30,000 substantial improvement minus $5,000). 2011 tax return form Nancy must also include the $35,000 nonqualified debt portion in income on Form 1040, line 21. 2011 tax return form You can see Nancy's Form 1099-C and a portion of her Form 1040 below. 2011 tax return form Nancy's 2013 Form 1099-C, Cancellation of Debt This image is too large to be displayed in the current screen. 2011 tax return form Please click the link to view the image. 2011 tax return form Form 1099-C, Cancellation of Debt Nancy's 2013 Form 1040 This image is too large to be displayed in the current screen. 2011 tax return form Please click the link to view the image. 2011 tax return form Form 1040, U. 2011 tax return form S. 2011 tax return form Individual Income Tax Nancy's Form 982 This image is too large to be displayed in the current screen. 2011 tax return form Please click the link to view the image. 2011 tax return form Form 982 Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment)              Example 2—Mortgage loan foreclosure. 2011 tax return form    In 2005, John and Mary Elm bought a main home for $335,000. 2011 tax return form John and Mary took out a $320,000 mortgage loan to buy the home and made a down payment of $15,000. 2011 tax return form The loan was secured by the home and is a recourse debt, meaning John and Mary are personally liable for the debt. 2011 tax return form   John and Mary became unable to make their mortgage loan payments and on March 1, 2013, when the outstanding balance of the mortgage loan was $315,000 and the FMV of the property was $290,000, the bank foreclosed on the property and simultaneously canceled the remaining mortgage debt. 2011 tax return form Immediately before the foreclosure, John and Mary's only other assets and liabilities were a checking account with a balance of $6,000, retirement savings of $13,000, and credit card debt of $5,500. 2011 tax return form   John and Mary received a 2013 Form 1099-C showing canceled debt of $25,000 in box 2 ($315,000 outstanding balance minus $290,000 FMV) and an FMV of $290,000 in box 7. 2011 tax return form Identifiable event code "D" appears in box 6. 2011 tax return form This box shows the reason the creditor has filed Form 1099-C. 2011 tax return form In order to determine if John and Mary must include the canceled debt in income, they must first determine whether they meet any of the exceptions or exclusions that apply to canceled debts. 2011 tax return form In this example, John and Mary meet both the insolvency and qualified principal residence indebtedness exclusions. 2011 tax return form Their sample Form 1099-C is shown on this page. 2011 tax return form   John and Mary complete the insolvency worksheet and determine that they were insolvent immediately before the cancellation because at that time their liabilities exceeded the FMV of their assets by $11,500 ($320,500 total liabilities minus $309,000 FMV of total assets). 2011 tax return form However, because the entire debt canceled is qualified principal residence indebtedness, the insolvency exclusion only applies if John and Mary elect to apply the insolvency exclusion instead of the qualified principal residence exclusion. 2011 tax return form   John and Mary do not elect to apply the insolvency exclusion instead of the qualified principal residence exclusion because under the insolvency exclusion their exclusion would be limited to the amount by which they were insolvent ($11,500). 2011 tax return form Instead, John and Mary check box 1e of Form 982 to exclude the canceled debt under the qualified principal residence exclusion. 2011 tax return form Under the qualified principal residence exclusion, the amount that John and Mary can exclude is not limited because their qualified principal residence indebtedness is not more than $2 million and no portion of the loan was nonqualified debt. 2011 tax return form As a result, John and Mary enter the full $25,000 of canceled debt on line 2 of Form 982. 2011 tax return form Because John and Mary no longer own the home due to the foreclosure, John and Mary have no remaining basis in the home at the time of the debt cancellation. 2011 tax return form Thus, John and Mary leave line 10b of Form 982 blank. 2011 tax return form   John and Mary must also determine whether they have a gain or loss from the foreclosure. 2011 tax return form John and Mary complete Table 1-1 (shown below) and find that they have a $45,000 loss from the foreclosure. 2011 tax return form Because this loss relates to their home, it is a nondeductible loss. 2011 tax return form   John and Mary's Form 1099-C, Insolvency Worksheet, and Form 982 follow. 2011 tax return form John and Mary's 2013 Form 1099-C, Cancellation of Debt This image is too large to be displayed in the current screen. 2011 tax return form Please click the link to view the image. 2011 tax return form Form 1099-C, Cancellation of Debt Table 1-1. 2011 tax return form Worksheet for Foreclosures and Repossessions (for John and Mary Elm) Part 1. 2011 tax return form Complete Part 1 only if you were personally liable for the debt (even if none of the debt was canceled). 2011 tax return form Otherwise, go to Part 2. 2011 tax return form 1. 2011 tax return form Enter the amount of outstanding debt immediately before the transfer of property reduced by any amount for which you remain personally liable immediately after the transfer of property $315,000. 2011 tax return form 00 2. 2011 tax return form Enter the fair market value of the transferred property $290,000. 2011 tax return form 00 3. 2011 tax return form Ordinary income from the cancellation of debt upon foreclosure or repossession. 2011 tax return form * Subtract line 2 from line 1. 2011 tax return form If less than zero, enter zero. 2011 tax return form Next, go to Part 2 $ 25,000. 2011 tax return form 00 Part 2. 2011 tax return form Gain or loss from foreclosure or repossession. 2011 tax return form   4. 2011 tax return form Enter the smaller of line 1 or line 2. 2011 tax return form If you did not complete Part 1 (because you were not personally liable for the debt), enter the amount of outstanding debt immediately before the transfer of property $290,000. 2011 tax return form 00 5. 2011 tax return form Enter any proceeds you received from the foreclosure sale   6. 2011 tax return form Add line 4 and line 5 $290,000. 2011 tax return form 00 7. 2011 tax return form Enter the adjusted basis of the transferred property $335,000. 2011 tax return form 00 8. 2011 tax return form Gain or loss from foreclosure or repossession. 2011 tax return form Subtract line 7 from line 6 ($ 45,000. 2011 tax return form 00) * The income may not be taxable. 2011 tax return form See chapter 1 for more details. 2011 tax return form Insolvency Worksheet—John and Mary Elm Date debt was canceled (mm/dd/yy) 03/01/13 Part I. 2011 tax return form Total liabilities immediately before the cancellation (do not include the same liability in more than one category) Liabilities (debts) Amount Owed Immediately Before the Cancellation 1. 2011 tax return form Credit card debt $ 5,500 2. 2011 tax return form Mortgage(s) on real property (including first and second mortgages and home equity loans) (mortgage(s) can be on personal residence, any additional residence, or property held for investment or used in a trade or business) $ 315,000 3. 2011 tax return form Car and other vehicle loans $ 4. 2011 tax return form Medical bills owed $ 5. 2011 tax return form Student loans $ 6. 2011 tax return form Accrued or past-due mortgage interest $ 7. 2011 tax return form Accrued or past-due real estate taxes $ 8. 2011 tax return form Accrued or past-due utilities (water, gas, electric) $ 9. 2011 tax return form Accrued or past-due child care costs $ 10. 2011 tax return form Federal or state income taxes remaining due (for prior tax years) $ 11. 2011 tax return form Judgments $ 12. 2011 tax return form Business debts (including those owed as a sole proprietor or partner) $ 13. 2011 tax return form Margin debt on stocks and other debt to purchase or secured by investment assets other than real property $ 14. 2011 tax return form Other liabilities (debts) not included above $ 15. 2011 tax return form Total liabilities immediately before the cancellation. 2011 tax return form Add lines 1 through 14. 2011 tax return form $ 320,500 Part II. 2011 tax return form Fair market value (FMV) of assets owned immediately before the cancellation (do not include the FMV of the same asset in more than one category) Assets FMV Immediately Before  the Cancellation 16. 2011 tax return form Cash and bank account balances $ 6,000 17. 2011 tax return form Real property, including the value of land (can be main home, any additional home, or property held for investment or used in a trade or business) $ 290,000 18. 2011 tax return form Cars and other vehicles $ 19. 2011 tax return form Computers $ 20. 2011 tax return form Household goods and furnishings (for example, appliances, electronics, furniture, etc. 2011 tax return form ) $ 21. 2011 tax return form Tools $ 22. 2011 tax return form Jewelry $ 23. 2011 tax return form Clothing $ 24. 2011 tax return form Books $ 25. 2011 tax return form Stocks and bonds $ 26. 2011 tax return form Investments in coins, stamps, paintings, or other collectibles $ 27. 2011 tax return form Firearms, sports, photographic, and other hobby equipment $ 28. 2011 tax return form Interest in retirement accounts (IRA accounts, 401(k) accounts, and other retirement accounts) $ 13,000 29. 2011 tax return form Interest in a pension plan $ 30. 2011 tax return form Interest in education accounts $ 31. 2011 tax return form Cash value of life insurance $ 32. 2011 tax return form Security deposits with landlords, utilities, and others $ 33. 2011 tax return form Interests in partnerships $ 34. 2011 tax return form Value of investment in a business $ 35. 2011 tax return form Other investments (for example, annuity contracts, guaranteed investment contracts, mutual funds, commodity accounts, interests in hedge funds, and options) $ 36. 2011 tax return form Other assets not included above $ 37. 2011 tax return form FMV of total assets immediately before the cancellation. 2011 tax return form Add lines 16 through 36. 2011 tax return form $ 309,000 Part III. 2011 tax return form Insolvency 38. 2011 tax return form Amount of Insolvency. 2011 tax return form Subtract line 37 from line 15. 2011 tax return form If zero or less, you are not insolvent. 2011 tax return form $ 11,500 John and Mary's Form 982 This image is too large to be displayed in the current screen. 2011 tax return form Please click the link to view the image. 2011 tax return form Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment)          Example 3—Mortgage loan foreclosure with debt exceeding $2 million limit. 2011 tax return form    In 2011, Kathy and Frank Willow got married and entered into a contract with Hive Construction Corporation to build a house for $3,000,000 to be used as their main home. 2011 tax return form Kathy and Frank made a $400,000 down payment and took out a $2,600,000 mortgage to finance the remaining cost of the house. 2011 tax return form Kathy and Frank are personally liable for the mortgage loan, which is secured by the home. 2011 tax return form   In November 2013, when the outstanding principal balance on the mortgage loan was $2,500,000, the FMV of the property fell to $1,750,000 and Kathy and Frank abandoned the property by permanently moving out. 2011 tax return form The lender foreclosed on the property and, on December 5, 2013, sold the property to another buyer for $1,750,000. 2011 tax return form On December 26, 2013, the lender canceled the remaining debt. 2011 tax return form Kathy and Frank have no tax attributes other than basis of personal-use property. 2011 tax return form   The lender issued a 2013 Form 1099-C to Kathy and Frank showing canceled debt of $750,000 in box 2 (the remaining balance on the $2,500,000 mortgage debt after application of the foreclosure sale proceeds) and $1,750,000 in box 7 (FMV of the property). 2011 tax return form Identifiable event code "D" appears in box 6. 2011 tax return form This box shows the reason the creditor has filed Form 1099-C. 2011 tax return form Although Kathy and Frank abandoned the property, the lender did not need to also file a Form 1099-A because the lender canceled the debt in connection with the foreclosure in the same calendar year. 2011 tax return form Kathy and Frank are filing a joint return for 2013. 2011 tax return form   Because the foreclosure occurred prior to the debt cancellation, Kathy and Frank first calculate their gain or loss from the foreclosure using Table 1-1. 2011 tax return form Because Kathy and Frank remained personally liable for the $750,000 debt remaining after the foreclosure ($2,500,000 outstanding debt immediately before the foreclosure minus $1,750,000 satisfied through the sale of the home), Kathy and Frank enter $1,750,000 on line 1 of Table 1-1 ($2,500,000 outstanding debt immediately before the foreclosure minus the $750,000 for which they remained liable). 2011 tax return form Completing Table 1-1, Kathy and Frank find that they have no ordinary income from the cancellation of debt upon foreclosure and that they have a $1,250,000 loss. 2011 tax return form Because this loss relates to their home, it is a nondeductible loss. 2011 tax return form   Because the lender later canceled the remaining amount of the debt, Kathy and Frank must also determine whether that canceled debt is taxable. 2011 tax return form Immediately before the cancellation, Kathy and Frank had $15,000 in a savings account, household furnishings with an FMV of $17,000, a car with an FMV of $10,000, and $18,000 in credit card debt. 2011 tax return form Kathy and Frank also had the $750,000 remaining balance on the mortgage loan at that time. 2011 tax return form The household furnishings originally cost $30,000. 2011 tax return form The car had been fully paid off (so there was no related outstanding debt) and was originally purchased for $16,000. 2011 tax return form Kathy and Frank had no adjustments to the cost basis of the car. 2011 tax return form Kathy and Frank had no other assets or liabilities at the time of the cancellation. 2011 tax return form Kathy and Frank complete the insolvency worksheet to calculate that they were insolvent to the extent of $726,000 immediately before the cancellation ($768,000 of total liabilities minus $42,000 FMV of total assets). 2011 tax return form   At the beginning of 2014, Kathy and Frank had $9,000 in their savings account and $15,000 in credit card debt. 2011 tax return form Kathy and Frank also owned the same car at that time (still with an FMV of $10,000 and basis of $16,000) and the same household furnishings (still with an FMV of $17,000 and a basis of $30,000). 2011 tax return form Kathy and Frank had no other assets or liabilities at that time. 2011 tax return form Kathy and Frank no longer own the home because the lender foreclosed on it in 2013. 2011 tax return form   Because the canceled debt is qualified principal residence indebtedness, the insolvency exclusion does not apply unless Kathy and Frank elect to apply the insolvency exclusion instead of the qualified principal residence indebtedness exclusion. 2011 tax return form The maximum amount that Kathy and Frank can treat as qualified principal residence indebtedness is $2,000,000. 2011 tax return form The remaining $500,000 ($2,500,000 outstanding mortgage loan minus $2,000,000 limit on qualified principal residence indebtedness) is not qualified principal residence indebtedness. 2011 tax return form Because only a part of the loan is qualified principal residence indebtedness, Kathy and Frank must apply the ordering rule to the canceled debt. 2011 tax return form Under the ordering rule, the qualified principal residence indebtedness exclusion applies only to the extent that the amount canceled ($750,000) exceeds the amount of the loan (immediately before the cancellation) that is not qualified principal residence indebtedness ($500,000). 2011 tax return form This means that Kathy and Frank can only exclude $250,000 ($750,000 amount canceled minus $500,000 nonqualified debt) under the qualified principal residence indebtedness exclusion. 2011 tax return form   Kathy and Frank do not elect to have the insolvency exclusion apply instead of the qualified principal residence exclusion. 2011 tax return form Nonetheless, they can still apply the insolvency exclusion to the $500,000 nonqualified debt because it is not qualified principal residence indebtedness. 2011 tax return form Kathy and Frank can exclude the remaining $500,000 canceled debt under the insolvency exclusion because they were insolvent immediately before the cancellation to the extent of $726,000. 2011 tax return form Thus, Kathy and Frank check the boxes on lines 1b and 1e of Form 982 and enter $750,000 on line 2 ($250,000 excluded under the qualified principal residence indebtedness exclusion plus $500,000 excluded under the insolvency exclusion). 2011 tax return form   Next, Kathy and Frank reduce their tax attributes using Part II of Form 982. 2011 tax return form Because Kathy and Frank no longer own the home due to the foreclosure, Kathy and Frank have no remaining basis in the home at the time of the debt cancellation. 2011 tax return form Thus, Kathy and Frank leave line 10b of Form 982 blank. 2011 tax return form However, Kathy and Frank are also excluding nonqualified debt under the insolvency exclusion. 2011 tax return form As a result, Kathy and Frank must reduce the basis of property they own based on the amount of canceled debt they are excluding from income under the insolvency rules. 2011 tax return form Because Kathy and Frank have no tax attributes other than basis of personal-use property to reduce, Kathy and Frank figure the amount they must include on line 10a of Form 982 by taking the smallest of: The $46,000 bases of their personal-use property held at the beginning of 2014 ($16,000 basis in the car plus $30,000 basis in household furnishings), The $500,000 of the nonbusiness debt (other than qualified principal residence indebtedness) that they are excluding from income on line 2 of Form 982, or The $43,000 excess of the total bases of the property and the amount of money they held immediately after the cancellation over their total liabilities immediately after the cancellation ($15,000 in savings account plus $30,000 basis in household furnishings plus $16,000 adjusted basis in car minus $18,000 credit card debt). 2011 tax return form Kathy and Frank enter $43,000 on Form 982, line 10a and reduce their bases in the car and the household furnishings in proportion to the total adjusted bases in all their property. 2011 tax return form Kathy and Frank reduce the basis in the car by $14,956. 2011 tax return form 52 ($43,000 x $16,000/$46,000). 2011 tax return form And they reduce the basis in the household furnishings by $28,043. 2011 tax return form 48 ($43,000 x $30,000/$46,000). 2011 tax return form   Following are Kathy and Frank's sample forms and worksheets. 2011 tax return form Frank and Kathy's 2013 Form 1099-C, Cancellation of Debt This image is too large to be displayed in the current screen. 2011 tax return form Please click the link to view the image. 2011 tax return form Form 1099-C, Cancellation of Debt Table 1-1. 2011 tax return form Worksheet for Foreclosures and Repossessions (for Frank and Kathy Willow) Part 1. 2011 tax return form Complete Part 1 only if you were personally liable for the debt (even if none of the debt was canceled). 2011 tax return form Otherwise, go to Part 2. 2011 tax return form 1. 2011 tax return form Enter the amount of outstanding debt immediately before the transfer of property reduced by any amount for which you remain personally liable immediately after the transfer of property $1,750,000. 2011 tax return form 00 2. 2011 tax return form Enter the fair market value of the transferred property $1,750,000. 2011 tax return form 00 3. 2011 tax return form Ordinary income from the cancellation of debt upon foreclosure or repossession. 2011 tax return form * Subtract line 2 from line 1. 2011 tax return form If less than zero, enter zero. 2011 tax return form Next, go to Part 2 $0. 2011 tax return form 00 Part 2. 2011 tax return form Gain or loss from foreclosure or repossession. 2011 tax return form   4. 2011 tax return form Enter the smaller of line 1 or line 2. 2011 tax return form If you did not complete Part 1 (because you were not personally liable for the debt), enter the amount of outstanding debt immediately before the transfer of property. 2011 tax return form $1,750,000. 2011 tax return form 00 5. 2011 tax return form Enter any proceeds you received from the foreclosure sale   6. 2011 tax return form Add line 4 and line 5 $1,750,000. 2011 tax return form 00 7. 2011 tax return form Enter the adjusted basis of the transferred property $3,000,000. 2011 tax return form 00 8. 2011 tax return form Gain or loss from foreclosure or repossession. 2011 tax return form Subtract line 7 from line 6 ($1,250,000. 2011 tax return form 00) * The income may not be taxable. 2011 tax return form See chapter 1 for more details. 2011 tax return form    Insolvency Worksheet—Frank and Kathy Willow Date debt was canceled (mm/dd/yy) 12/26/13 Part I. 2011 tax return form Total liabilities immediately before the cancellation (do not include the same liability in more than one category) Liabilities (debts) Amount Owed Immediately Before the Cancellation 1. 2011 tax return form Credit card debt $ 18,000 2. 2011 tax return form Mortgage(s) on real property (including first and second mortgages and home equity loans) (mortgage(s) can be on personal residence, any additional residence, or property held for investment or used in a trade or business) $ 750,000 3. 2011 tax return form Car and other vehicle loans $ 4. 2011 tax return form Medical bills owed $ 5. 2011 tax return form Student loans $ 6. 2011 tax return form Accrued or past-due mortgage interest $ 7. 2011 tax return form Accrued or past-due real estate taxes $ 8. 2011 tax return form Accrued or past-due utilities (water, gas, electric) $ 9. 2011 tax return form Accrued or past-due child care costs $ 10. 2011 tax return form Federal or state income taxes remaining due (for prior tax years) $ 11. 2011 tax return form Judgments $ 12. 2011 tax return form Business debts (including those owed as a sole proprietor or partner) $ 13. 2011 tax return form Margin debt on stocks and other debt to purchase or secured by investment assets other than real property $ 14. 2011 tax return form Other liabilities (debts) not included above $ 15. 2011 tax return form Total liabilities immediately before the cancellation. 2011 tax return form Add lines 1 through 14. 2011 tax return form $ 768,000 Part II. 2011 tax return form Fair market value (FMV) of assets owned immediately before the cancellation (do not include the FMV of the same asset in more than one category) Assets FMV Immediately Before  the Cancellation 16. 2011 tax return form Cash and bank account balances $ 15,000 17. 2011 tax return form Real property, including the value of land (can be main home, any additional home, or property held for investment or used in a trade or business) $ 18. 2011 tax return form Cars and other vehicles $ 10,000 19. 2011 tax return form Computers $ 20. 2011 tax return form Household goods and furnishings (for example, appliances, electronics, furniture, etc. 2011 tax return form ) $ 17,000 21. 2011 tax return form Tools $ 22. 2011 tax return form Jewelry $ 23. 2011 tax return form Clothing $ 24. 2011 tax return form Books $ 25. 2011 tax return form Stocks and bonds $ 26. 2011 tax return form Investments in coins, stamps, paintings, or other collectibles $ 27. 2011 tax return form Firearms, sports, photographic, and other hobby equipment $ 28. 2011 tax return form Interest in retirement accounts (IRA accounts, 401(k) accounts, and other retirement accounts) $ 29. 2011 tax return form Interest in a pension plan $ 30. 2011 tax return form Interest in education accounts $ 31. 2011 tax return form Cash value of life insurance $ 32. 2011 tax return form Security deposits with landlords, utilities, and others $ 33. 2011 tax return form Interests in partnerships $ 34. 2011 tax return form Value of investment in a business $ 35. 2011 tax return form Other investments (for example, annuity contracts, guaranteed investment contracts, mutual funds, commodity accounts, interests in hedge funds, and options) $ 36. 2011 tax return form Other assets not included above $ 37. 2011 tax return form FMV of total assets immediately before the cancellation. 2011 tax return form Add lines 16 through 36. 2011 tax return form $ 42,000 Part III. 2011 tax return form Insolvency 38. 2011 tax return form Amount of Insolvency. 2011 tax return form Subtract line 37 from line 15. 2011 tax return form If zero or less, you are not insolvent. 2011 tax return form $ 726,000    Frank and Kathy's Form 982 This image is too large to be displayed in the current screen. 2011 tax return form Please click the link to view the image. 2011 tax return form Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) Prev  Up  Next   Home   More Online Publications