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

Irs Tax Form 2012 1040a

Tax PreparationE-file 2012 TaxAmend A ReturnH&r Block Tax FormIrs 1040ez 2010Federal 1040x2012 Income Tax Filing2010 1040ezState Income Tax Forms 20111040ez Instructions1040x Amended Tax FormFree Amended Tax Return OnlineTax Forms 2011 1040Amended Income Tax ReturnPrintable Tax Form 1040Easy Tax FormsFile Irs ExtensionTax MilitaryHow To File Amended Tax ReturnFile 2008 Taxes For FreeEfile State Income TaxIrs Tax Forms 2012 1040a1040ezCan I Still File My 2012 Taxes OnlineH & R Block Free Tax FilingFile Back Taxes Free1040ez Tax ReturnCan I Efile My 2012 TaxesHow Do I File My 2010 TaxesAmend 2012 Tax Return OnlineHr Block 1040nrFree 2007 Tax Software DownloadState Income Tax ReturnFile State Income TaxFree Federal And State Tax Filing 20121040ez Tax Forms To Print2011 Federal Tax FormsHow To E File State Taxes For FreeH&r BlockPrint 2011 Tax Forms

Irs Tax Form 2012 1040a

Irs tax form 2012 1040a Publication 850 (EN/SP) - Introductory Material Table of Contents Introduction Introduction This glossary is developed by the Tax Forms and Publications Division of the Internal Revenue Service, in consultation with the Translation Commission of the North American Academy of the Spanish Language (Comisión de Traducciones de la Academia Norteamericana de la Lengua Española) and with the Graduate Program in Translation of the University of Puerto Rico (Programa Graduado en Traducción de la Universidad de Puerto Rico). Irs tax form 2012 1040a Its purpose is to establish high standards for the quality of language usage, to promote uniformity in language usage, and to minimize the risk of misinterpretation of Spanish-language materials issued by the Service. Irs tax form 2012 1040a To meet the needs of the largest segment of taxpayers whose primary language is Spanish, the Service has issued certain Spanish-language materials. Irs tax form 2012 1040a Problems arise, however, because there is some variation in tax terminology used in Spanish-speaking countries. Irs tax form 2012 1040a Also, invention and compromise are involved in selecting words and phrases to describe certain tax concepts that have no precise equivalent in the Spanish language or legal tradition. Irs tax form 2012 1040a To help resolve these problems, a group of United States, Spanish, and Spanish-American academicians, professors, lawyers, accountants, translators, and tax law specialists developed this glossary. Irs tax form 2012 1040a Their long and varied experience with the tax systems in their own, and other countries, gives assurance of reliability. Irs tax form 2012 1040a The criteria used for words in this glossary are: consistency of usage with other governmental agencies, Spanish writing style for the tax forms and publications, and words relating to Accounting, Economics, Finance, Law, Technology and its related fields. Irs tax form 2012 1040a Any issuance containing language consistent with this glossary should be reasonably satisfactory for purposes of general guidance regarding the rights and obligations of taxpayers. Irs tax form 2012 1040a It is not intended, however, that any term in this glossary should be understood to change the meaning of any provisions of law, regulations, or any other authoritative precedent. Irs tax form 2012 1040a A periodic review is made to determine whether any additions, deletions, or revisions are needed. Irs tax form 2012 1040a Some of the terms listed are identified by the abbreviation “P. Irs tax form 2012 1040a R. Irs tax form 2012 1040a ” These terms are for use in tax forms and publications intended for circulation exclusively in Puerto Rico. Irs tax form 2012 1040a Users are invited to send their comments to: Internal Revenue Service Virtual Translation Office SE:W:CAR:MP:T:LS:VTO 1111 Constitution Ave. Irs tax form 2012 1040a , N. Irs tax form 2012 1040a W. Irs tax form 2012 1040a , IR-6102 Washington, DC 20224 or electronically to: vto@irs. Irs tax form 2012 1040a gov Prev  Up  Next   Home   More Online Publications
Español

Flood Response and Recovery

Resources to assist those who are affected by floods.

Find Family and Friends

  • Safe and Well Registry
    Use the Red Cross website to search for a loved one or to list yourself as "safe and well."

Get Help Before and After a Flood

Health and Safety

Back to Top

Donate and Volunteer

  • Serve.gov
    Visit Serve.gov to donate money and find volunteer opportunities in your community.

The Irs Tax Form 2012 1040a

Irs tax form 2012 1040a 4. Irs tax form 2012 1040a   Detailed Examples Table of Contents These examples use actual forms to help you prepare your income tax return. Irs tax form 2012 1040a However, the information shown on the filled-in forms is not from any actual person or scenario. Irs tax form 2012 1040a Example 1—Mortgage loan modification. Irs tax form 2012 1040a    In 2007, Nancy Oak bought a main home for $435,000. Irs tax form 2012 1040a Nancy took out a $420,000 mortgage loan to buy the home and made a down payment of $15,000. Irs tax form 2012 1040a The loan was secured by the home. Irs tax form 2012 1040a The mortgage loan was a recourse debt, meaning that Nancy was personally liable for the debt. Irs tax form 2012 1040a 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. Irs tax form 2012 1040a    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. Irs tax form 2012 1040a The FMV of Nancy's home at the time of the refinancing was $500,000. Irs tax form 2012 1040a 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. Irs tax form 2012 1040a 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. Irs tax form 2012 1040a   In 2013, Nancy was unable to make her mortgage loan payments. Irs tax form 2012 1040a 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. Irs tax form 2012 1040a Nancy was neither insolvent nor in bankruptcy at the time of the loan modification. Irs tax form 2012 1040a   Nancy received a 2013 Form 1099-C from her bank in January 2014 showing canceled debt of $40,000 in box 2. Irs tax form 2012 1040a Identifiable event code "F" appears in box 6. Irs tax form 2012 1040a This box shows the reason the creditor has filed Form 1099-C. Irs tax form 2012 1040a 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. Irs tax form 2012 1040a Nancy determines that the only exception or exclusion that applies to her is the qualified principal residence indebtedness exclusion. Irs tax form 2012 1040a   Next, Nancy determines the amount, if any, of the $40,000 of canceled debt that was qualified principal residence indebtedness. Irs tax form 2012 1040a 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. Irs tax form 2012 1040a 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. Irs tax form 2012 1040a 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). Irs tax form 2012 1040a   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. Irs tax form 2012 1040a 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). Irs tax form 2012 1040a Nancy must also include the $35,000 nonqualified debt portion in income on Form 1040, line 21. Irs tax form 2012 1040a You can see Nancy's Form 1099-C and a portion of her Form 1040 below. Irs tax form 2012 1040a Nancy's 2013 Form 1099-C, Cancellation of Debt This image is too large to be displayed in the current screen. Irs tax form 2012 1040a Please click the link to view the image. Irs tax form 2012 1040a Form 1099-C, Cancellation of Debt Nancy's 2013 Form 1040 This image is too large to be displayed in the current screen. Irs tax form 2012 1040a Please click the link to view the image. Irs tax form 2012 1040a Form 1040, U. Irs tax form 2012 1040a S. Irs tax form 2012 1040a Individual Income Tax Nancy's Form 982 This image is too large to be displayed in the current screen. Irs tax form 2012 1040a Please click the link to view the image. Irs tax form 2012 1040a Form 982 Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment)              Example 2—Mortgage loan foreclosure. Irs tax form 2012 1040a    In 2005, John and Mary Elm bought a main home for $335,000. Irs tax form 2012 1040a John and Mary took out a $320,000 mortgage loan to buy the home and made a down payment of $15,000. Irs tax form 2012 1040a The loan was secured by the home and is a recourse debt, meaning John and Mary are personally liable for the debt. Irs tax form 2012 1040a   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. Irs tax form 2012 1040a 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. Irs tax form 2012 1040a   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. Irs tax form 2012 1040a Identifiable event code "D" appears in box 6. Irs tax form 2012 1040a This box shows the reason the creditor has filed Form 1099-C. Irs tax form 2012 1040a 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. Irs tax form 2012 1040a In this example, John and Mary meet both the insolvency and qualified principal residence indebtedness exclusions. Irs tax form 2012 1040a Their sample Form 1099-C is shown on this page. Irs tax form 2012 1040a   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). Irs tax form 2012 1040a 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. Irs tax form 2012 1040a   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). Irs tax form 2012 1040a Instead, John and Mary check box 1e of Form 982 to exclude the canceled debt under the qualified principal residence exclusion. Irs tax form 2012 1040a 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. Irs tax form 2012 1040a As a result, John and Mary enter the full $25,000 of canceled debt on line 2 of Form 982. Irs tax form 2012 1040a 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. Irs tax form 2012 1040a Thus, John and Mary leave line 10b of Form 982 blank. Irs tax form 2012 1040a   John and Mary must also determine whether they have a gain or loss from the foreclosure. Irs tax form 2012 1040a John and Mary complete Table 1-1 (shown below) and find that they have a $45,000 loss from the foreclosure. Irs tax form 2012 1040a Because this loss relates to their home, it is a nondeductible loss. Irs tax form 2012 1040a   John and Mary's Form 1099-C, Insolvency Worksheet, and Form 982 follow. Irs tax form 2012 1040a John and Mary's 2013 Form 1099-C, Cancellation of Debt This image is too large to be displayed in the current screen. Irs tax form 2012 1040a Please click the link to view the image. Irs tax form 2012 1040a Form 1099-C, Cancellation of Debt Table 1-1. Irs tax form 2012 1040a Worksheet for Foreclosures and Repossessions (for John and Mary Elm) Part 1. Irs tax form 2012 1040a Complete Part 1 only if you were personally liable for the debt (even if none of the debt was canceled). Irs tax form 2012 1040a Otherwise, go to Part 2. Irs tax form 2012 1040a 1. Irs tax form 2012 1040a 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. Irs tax form 2012 1040a 00 2. Irs tax form 2012 1040a Enter the fair market value of the transferred property $290,000. Irs tax form 2012 1040a 00 3. Irs tax form 2012 1040a Ordinary income from the cancellation of debt upon foreclosure or repossession. Irs tax form 2012 1040a * Subtract line 2 from line 1. Irs tax form 2012 1040a If less than zero, enter zero. Irs tax form 2012 1040a Next, go to Part 2 $ 25,000. Irs tax form 2012 1040a 00 Part 2. Irs tax form 2012 1040a Gain or loss from foreclosure or repossession. Irs tax form 2012 1040a   4. Irs tax form 2012 1040a Enter the smaller of line 1 or line 2. Irs tax form 2012 1040a 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. Irs tax form 2012 1040a 00 5. Irs tax form 2012 1040a Enter any proceeds you received from the foreclosure sale   6. Irs tax form 2012 1040a Add line 4 and line 5 $290,000. Irs tax form 2012 1040a 00 7. Irs tax form 2012 1040a Enter the adjusted basis of the transferred property $335,000. Irs tax form 2012 1040a 00 8. Irs tax form 2012 1040a Gain or loss from foreclosure or repossession. Irs tax form 2012 1040a Subtract line 7 from line 6 ($ 45,000. Irs tax form 2012 1040a 00) * The income may not be taxable. Irs tax form 2012 1040a See chapter 1 for more details. Irs tax form 2012 1040a Insolvency Worksheet—John and Mary Elm Date debt was canceled (mm/dd/yy) 03/01/13 Part I. Irs tax form 2012 1040a 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. Irs tax form 2012 1040a Credit card debt $ 5,500 2. Irs tax form 2012 1040a 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. Irs tax form 2012 1040a Car and other vehicle loans $ 4. Irs tax form 2012 1040a Medical bills owed $ 5. Irs tax form 2012 1040a Student loans $ 6. Irs tax form 2012 1040a Accrued or past-due mortgage interest $ 7. Irs tax form 2012 1040a Accrued or past-due real estate taxes $ 8. Irs tax form 2012 1040a Accrued or past-due utilities (water, gas, electric) $ 9. Irs tax form 2012 1040a Accrued or past-due child care costs $ 10. Irs tax form 2012 1040a Federal or state income taxes remaining due (for prior tax years) $ 11. Irs tax form 2012 1040a Judgments $ 12. Irs tax form 2012 1040a Business debts (including those owed as a sole proprietor or partner) $ 13. Irs tax form 2012 1040a Margin debt on stocks and other debt to purchase or secured by investment assets other than real property $ 14. Irs tax form 2012 1040a Other liabilities (debts) not included above $ 15. Irs tax form 2012 1040a Total liabilities immediately before the cancellation. Irs tax form 2012 1040a Add lines 1 through 14. Irs tax form 2012 1040a $ 320,500 Part II. Irs tax form 2012 1040a 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. Irs tax form 2012 1040a Cash and bank account balances $ 6,000 17. Irs tax form 2012 1040a 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. Irs tax form 2012 1040a Cars and other vehicles $ 19. Irs tax form 2012 1040a Computers $ 20. Irs tax form 2012 1040a Household goods and furnishings (for example, appliances, electronics, furniture, etc. Irs tax form 2012 1040a ) $ 21. Irs tax form 2012 1040a Tools $ 22. Irs tax form 2012 1040a Jewelry $ 23. Irs tax form 2012 1040a Clothing $ 24. Irs tax form 2012 1040a Books $ 25. Irs tax form 2012 1040a Stocks and bonds $ 26. Irs tax form 2012 1040a Investments in coins, stamps, paintings, or other collectibles $ 27. Irs tax form 2012 1040a Firearms, sports, photographic, and other hobby equipment $ 28. Irs tax form 2012 1040a Interest in retirement accounts (IRA accounts, 401(k) accounts, and other retirement accounts) $ 13,000 29. Irs tax form 2012 1040a Interest in a pension plan $ 30. Irs tax form 2012 1040a Interest in education accounts $ 31. Irs tax form 2012 1040a Cash value of life insurance $ 32. Irs tax form 2012 1040a Security deposits with landlords, utilities, and others $ 33. Irs tax form 2012 1040a Interests in partnerships $ 34. Irs tax form 2012 1040a Value of investment in a business $ 35. Irs tax form 2012 1040a Other investments (for example, annuity contracts, guaranteed investment contracts, mutual funds, commodity accounts, interests in hedge funds, and options) $ 36. Irs tax form 2012 1040a Other assets not included above $ 37. Irs tax form 2012 1040a FMV of total assets immediately before the cancellation. Irs tax form 2012 1040a Add lines 16 through 36. Irs tax form 2012 1040a $ 309,000 Part III. Irs tax form 2012 1040a Insolvency 38. Irs tax form 2012 1040a Amount of Insolvency. Irs tax form 2012 1040a Subtract line 37 from line 15. Irs tax form 2012 1040a If zero or less, you are not insolvent. Irs tax form 2012 1040a $ 11,500 John and Mary's Form 982 This image is too large to be displayed in the current screen. Irs tax form 2012 1040a Please click the link to view the image. Irs tax form 2012 1040a 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. Irs tax form 2012 1040a    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. Irs tax form 2012 1040a 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. Irs tax form 2012 1040a Kathy and Frank are personally liable for the mortgage loan, which is secured by the home. Irs tax form 2012 1040a   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. Irs tax form 2012 1040a The lender foreclosed on the property and, on December 5, 2013, sold the property to another buyer for $1,750,000. Irs tax form 2012 1040a On December 26, 2013, the lender canceled the remaining debt. Irs tax form 2012 1040a Kathy and Frank have no tax attributes other than basis of personal-use property. Irs tax form 2012 1040a   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). Irs tax form 2012 1040a Identifiable event code "D" appears in box 6. Irs tax form 2012 1040a This box shows the reason the creditor has filed Form 1099-C. Irs tax form 2012 1040a 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. Irs tax form 2012 1040a Kathy and Frank are filing a joint return for 2013. Irs tax form 2012 1040a   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. Irs tax form 2012 1040a 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). Irs tax form 2012 1040a 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. Irs tax form 2012 1040a Because this loss relates to their home, it is a nondeductible loss. Irs tax form 2012 1040a   Because the lender later canceled the remaining amount of the debt, Kathy and Frank must also determine whether that canceled debt is taxable. Irs tax form 2012 1040a 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. Irs tax form 2012 1040a Kathy and Frank also had the $750,000 remaining balance on the mortgage loan at that time. Irs tax form 2012 1040a The household furnishings originally cost $30,000. Irs tax form 2012 1040a The car had been fully paid off (so there was no related outstanding debt) and was originally purchased for $16,000. Irs tax form 2012 1040a Kathy and Frank had no adjustments to the cost basis of the car. Irs tax form 2012 1040a Kathy and Frank had no other assets or liabilities at the time of the cancellation. Irs tax form 2012 1040a 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). Irs tax form 2012 1040a   At the beginning of 2014, Kathy and Frank had $9,000 in their savings account and $15,000 in credit card debt. Irs tax form 2012 1040a 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). Irs tax form 2012 1040a Kathy and Frank had no other assets or liabilities at that time. Irs tax form 2012 1040a Kathy and Frank no longer own the home because the lender foreclosed on it in 2013. Irs tax form 2012 1040a   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. Irs tax form 2012 1040a The maximum amount that Kathy and Frank can treat as qualified principal residence indebtedness is $2,000,000. Irs tax form 2012 1040a 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. Irs tax form 2012 1040a Because only a part of the loan is qualified principal residence indebtedness, Kathy and Frank must apply the ordering rule to the canceled debt. Irs tax form 2012 1040a 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). Irs tax form 2012 1040a 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. Irs tax form 2012 1040a   Kathy and Frank do not elect to have the insolvency exclusion apply instead of the qualified principal residence exclusion. Irs tax form 2012 1040a Nonetheless, they can still apply the insolvency exclusion to the $500,000 nonqualified debt because it is not qualified principal residence indebtedness. Irs tax form 2012 1040a 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. Irs tax form 2012 1040a 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). Irs tax form 2012 1040a   Next, Kathy and Frank reduce their tax attributes using Part II of Form 982. Irs tax form 2012 1040a 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. Irs tax form 2012 1040a Thus, Kathy and Frank leave line 10b of Form 982 blank. Irs tax form 2012 1040a However, Kathy and Frank are also excluding nonqualified debt under the insolvency exclusion. Irs tax form 2012 1040a 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. Irs tax form 2012 1040a 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). Irs tax form 2012 1040a 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. Irs tax form 2012 1040a Kathy and Frank reduce the basis in the car by $14,956. Irs tax form 2012 1040a 52 ($43,000 x $16,000/$46,000). Irs tax form 2012 1040a And they reduce the basis in the household furnishings by $28,043. Irs tax form 2012 1040a 48 ($43,000 x $30,000/$46,000). Irs tax form 2012 1040a   Following are Kathy and Frank's sample forms and worksheets. Irs tax form 2012 1040a Frank and Kathy's 2013 Form 1099-C, Cancellation of Debt This image is too large to be displayed in the current screen. Irs tax form 2012 1040a Please click the link to view the image. Irs tax form 2012 1040a Form 1099-C, Cancellation of Debt Table 1-1. Irs tax form 2012 1040a Worksheet for Foreclosures and Repossessions (for Frank and Kathy Willow) Part 1. Irs tax form 2012 1040a Complete Part 1 only if you were personally liable for the debt (even if none of the debt was canceled). Irs tax form 2012 1040a Otherwise, go to Part 2. Irs tax form 2012 1040a 1. Irs tax form 2012 1040a 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. Irs tax form 2012 1040a 00 2. Irs tax form 2012 1040a Enter the fair market value of the transferred property $1,750,000. Irs tax form 2012 1040a 00 3. Irs tax form 2012 1040a Ordinary income from the cancellation of debt upon foreclosure or repossession. Irs tax form 2012 1040a * Subtract line 2 from line 1. Irs tax form 2012 1040a If less than zero, enter zero. Irs tax form 2012 1040a Next, go to Part 2 $0. Irs tax form 2012 1040a 00 Part 2. Irs tax form 2012 1040a Gain or loss from foreclosure or repossession. Irs tax form 2012 1040a   4. Irs tax form 2012 1040a Enter the smaller of line 1 or line 2. Irs tax form 2012 1040a 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. Irs tax form 2012 1040a $1,750,000. Irs tax form 2012 1040a 00 5. Irs tax form 2012 1040a Enter any proceeds you received from the foreclosure sale   6. Irs tax form 2012 1040a Add line 4 and line 5 $1,750,000. Irs tax form 2012 1040a 00 7. Irs tax form 2012 1040a Enter the adjusted basis of the transferred property $3,000,000. Irs tax form 2012 1040a 00 8. Irs tax form 2012 1040a Gain or loss from foreclosure or repossession. Irs tax form 2012 1040a Subtract line 7 from line 6 ($1,250,000. Irs tax form 2012 1040a 00) * The income may not be taxable. Irs tax form 2012 1040a See chapter 1 for more details. Irs tax form 2012 1040a    Insolvency Worksheet—Frank and Kathy Willow Date debt was canceled (mm/dd/yy) 12/26/13 Part I. Irs tax form 2012 1040a 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. Irs tax form 2012 1040a Credit card debt $ 18,000 2. Irs tax form 2012 1040a 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. Irs tax form 2012 1040a Car and other vehicle loans $ 4. Irs tax form 2012 1040a Medical bills owed $ 5. Irs tax form 2012 1040a Student loans $ 6. Irs tax form 2012 1040a Accrued or past-due mortgage interest $ 7. Irs tax form 2012 1040a Accrued or past-due real estate taxes $ 8. Irs tax form 2012 1040a Accrued or past-due utilities (water, gas, electric) $ 9. Irs tax form 2012 1040a Accrued or past-due child care costs $ 10. Irs tax form 2012 1040a Federal or state income taxes remaining due (for prior tax years) $ 11. Irs tax form 2012 1040a Judgments $ 12. Irs tax form 2012 1040a Business debts (including those owed as a sole proprietor or partner) $ 13. Irs tax form 2012 1040a Margin debt on stocks and other debt to purchase or secured by investment assets other than real property $ 14. Irs tax form 2012 1040a Other liabilities (debts) not included above $ 15. Irs tax form 2012 1040a Total liabilities immediately before the cancellation. Irs tax form 2012 1040a Add lines 1 through 14. Irs tax form 2012 1040a $ 768,000 Part II. Irs tax form 2012 1040a 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. Irs tax form 2012 1040a Cash and bank account balances $ 15,000 17. Irs tax form 2012 1040a 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. Irs tax form 2012 1040a Cars and other vehicles $ 10,000 19. Irs tax form 2012 1040a Computers $ 20. Irs tax form 2012 1040a Household goods and furnishings (for example, appliances, electronics, furniture, etc. Irs tax form 2012 1040a ) $ 17,000 21. Irs tax form 2012 1040a Tools $ 22. Irs tax form 2012 1040a Jewelry $ 23. Irs tax form 2012 1040a Clothing $ 24. Irs tax form 2012 1040a Books $ 25. Irs tax form 2012 1040a Stocks and bonds $ 26. Irs tax form 2012 1040a Investments in coins, stamps, paintings, or other collectibles $ 27. Irs tax form 2012 1040a Firearms, sports, photographic, and other hobby equipment $ 28. Irs tax form 2012 1040a Interest in retirement accounts (IRA accounts, 401(k) accounts, and other retirement accounts) $ 29. Irs tax form 2012 1040a Interest in a pension plan $ 30. Irs tax form 2012 1040a Interest in education accounts $ 31. Irs tax form 2012 1040a Cash value of life insurance $ 32. Irs tax form 2012 1040a Security deposits with landlords, utilities, and others $ 33. Irs tax form 2012 1040a Interests in partnerships $ 34. Irs tax form 2012 1040a Value of investment in a business $ 35. Irs tax form 2012 1040a Other investments (for example, annuity contracts, guaranteed investment contracts, mutual funds, commodity accounts, interests in hedge funds, and options) $ 36. Irs tax form 2012 1040a Other assets not included above $ 37. Irs tax form 2012 1040a FMV of total assets immediately before the cancellation. Irs tax form 2012 1040a Add lines 16 through 36. Irs tax form 2012 1040a $ 42,000 Part III. Irs tax form 2012 1040a Insolvency 38. Irs tax form 2012 1040a Amount of Insolvency. Irs tax form 2012 1040a Subtract line 37 from line 15. Irs tax form 2012 1040a If zero or less, you are not insolvent. Irs tax form 2012 1040a $ 726,000    Frank and Kathy's Form 982 This image is too large to be displayed in the current screen. Irs tax form 2012 1040a Please click the link to view the image. Irs tax form 2012 1040a Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) Prev  Up  Next   Home   More Online Publications