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Form 982: Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment)
IRS Form 982 is used for Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment). This form reports exclusions from gross income when debt is forgiven and applies the reduction, such as a $750,000 limit for qualified principal residence indebtedness.
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IRS Form 982 - Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment)
IRS Form 982 is used for Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment). This form reports exclusions from gross income when debt is forgiven and applies the reduction, such as a $750,000 limit for qualified principal residence indebtedness.
Risk Radar
Scan points- 1If electing basis reduction on line 5, ensure all other attributes are reduced in strict order (lines 6-13).
- 2Failing to check the correct box on line 1a regarding the type of discharge.
- 3Not completing line 2 when checking box 1e for a Title 11 case.
- 4Omitting the required statement describing transactions for basis reduction under section 1017.
- 5Applying debt discharge to attributes out of order if not electing line 5 first.
Plain English
This form documents situations where you are forgiven a debt, which usually means that amount gets added to your taxable income. By filing Form 982, you report this excluded amount and choose how it reduces specific tax benefits or the basis of your property. This ensures the IRS knows exactly how much income was avoided due to the debt discharge.
Submission Date
- Filing date: 2021-12-27 22:10:12
- Preparation window: collect IDs, supporting records, and signatures in advance.
- Final review: verify names, dates, and required fields before submission.
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What this form is for
- Use this form when you benefit from the discharge of indebtedness and must report that exclusion or a basis reduction (dollar for dollar or 33 1/3 cents per dollar).
- Do not use Form 982 if no debt has been discharged, or if the amount excluded is zero.
- Check Form 3800 instead when reporting general business credit carryover related to the discharge of indebtedness.
Form selector
Use this form or another form?
Discharge involves qualified farm indebtedness
The discharge must be made by a qualified person, and 50% or more of aggregate gross receipts for the preceding 3 tax years must be from farming.
✓ Confirm Line 1c is checked.
Title 11 case or insolvency
Basis reduction in these cases is limited to the aggregate basis over the aggregate liabilities immediately after discharge (though this limit does not apply to line 5 reductions).
✓ Check Lines 10a/10b and ensure appropriate boxes are marked.
Discharge of qualified real property business indebtedness
This specific type requires an election on Line 1d regarding the reduction of basis.
✓ Verify that the election is made on a timely filed return or amended return within 6 months.
Deadline or filing window
The general filing deadline is with your federal income tax return for the year of discharge. If you timely file without making an election for basis reduction or qualified real property business indebtedness, you can still make that election by filing an amended return within 6 months of the due date (excluding extensions).
Checklist
What you need before filling it out
Line 1 (Amount excluded is due to)
Check applicable box(es) a, b, c, or d · Part I, Form p.1
Maximum QPR Indebtedness Amount
$750,000 ($375,000 if married filing separately) · Instructions p.1
Line 7 (General business credit reduction factor)
Reduce carryover by 33 1/3 cents for each dollar excluded from gross income · Instructions p.4 / Form p.1
Line 10a (Title 11/Insolvency Basis Limit)
Reduction is limited to aggregate basis over aggregate liabilities immediately after discharge · Instructions p.4 / Form p.1
Line 10b (Residence Ownership Check)
Enter smaller of [basis reduction amount] if box 1e is checked and you continue to own residence after discharge · Instructions p.4 / Form p.1
Line 11 (Qualified Farm Basis Reduction)
Must specify if property is Depreciable or Land used in farming business · Forms p.1 / Instructions p.4
Before you submit
- 1Verify that the Name shown on return matches your official name.
- 2Confirm that Part I, General Information is completed.
- 3Check which box(es) on Line 1 accurately describe why the amount was excluded (a, b, c, or d).
- 4If applicable, ensure Line 7 reduces any general business credit carryover by 33 1/3 cents per dollar excluded.
- 5If you are reporting a basis reduction for your principal residence, confirm if Line 1e is checked and fill out Line 10b accordingly.
- 6If discharging qualified farm indebtedness, verify that Lines 11a or 11b specify the property type being reduced in basis.
- 7Ensure the form is attached to your federal income tax return.
How to file this form
- 1Complete Part I of Form 982 by checking the applicable box(es) on Line 1 and filling in all necessary amounts for lines 7, 10b, and 11.
- 2Sign the form before sending it to ensure proper submission.
- 3Attach the completed Form 982 to your federal income tax return for the year of discharge.
- 4Keep a copy of the submitted Form 982 for your records.
Known limitations
- 1The maximum amount eligible for exclusion as qualified principal residence indebtedness is $750,000 ($375,000 if married filing separately) (Instructions p.1).
- 2If the debt discharge occurs in a title 11 case, Box 1e must be checked on Form 982 and line 2 must be completed (Instructions p.3).
- 3If an individual is insolvent but not in a title 11 case, they can elect to follow insolvency rules by checking box 1b instead of box 1e on Form 982 (Instructions p.3).
- 4The amount excluded cannot exceed the total of (a) tax attributes determined under section 108(g)(3)(B), and (b) basis of property used or held for use in a trade or business or for the production of income; any excess is included in income (Instructions p.2).
Field map
Compact field-by-field guide
General Info
2 items
Full legal name and taxpayer identification number (SSN or EIN).
Current mailing address.
Details
2 items
Complete all applicable sections of this form according to the official IRS instructions.
Enter the relevant dollar amount if this form involves tax calculation.
Certification
1 items
Read and acknowledge any certifications required by this form.
Signatures
1 items
Sign and date. Unsigned forms cannot be processed.
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Fillable formOpen in Editor->The current edition is March 2018, and instructions are based on a December 2021 revision. For the latest information regarding Form 982, the IRS directs users to IRS.gov/Form982.
What changed or needs a fresh check
- Edition date — confirm the form revision reads March 2018.
- Latest instructions — confirm reference to December 2021 instructions.
- Attachment sequence number — confirm it is 94.
- OMB Number — confirm it is 1545-0046.
Quick Facts
Downloads
After you file
- 1Attach Form 982 to your federal income tax return when filing it for the year that a discharge of indebtedness was excluded from income under section 108(a) (Form p.1).
- 2Keep a copy of Form 982 and attach a description of the transactions resulting in the nonrecognition of gain under section 1081 to support the filing (Form p.1).
- 3If elections for reducing basis are made on line 5 of Part I regarding qualified real property business indebtedness, these must be timely filed or can be amended within 6 months of the due date (Instructions p.1).
- 4The election to reduce the basis of depreciable property under section 108(b) (5) can be revoked only with the consent of the IRS after filing Form 982 (Instructions p.1).
Sources
- SRCInstructions p.1 — The maximum amount eligible for exclusion as qualified principal residence indebtedness is $750,000 ($375,000 if married filing separately) (Instructions p.1).
- SRCInstructions p.1 — Form 982 must be filed with your federal income tax return for a year a discharge of indebtedness is excluded from your income under section 108(a) (Instructions p.1).
- SRCInstructions p.2 — If line 1c is checked and line 5 election isn't made, the debt discharge amount reduces attributes in order lines 6 through 9, with remainder applying to lines 11a through 13 (Instructions p.2).
- SRCInstructions p.3 — To qualify for the exclusion regarding principal residence indebtedness, the debt must have been discharged before 2026 or subject to a written arrangement entered before January 1, 2026 (Instructions p.3).
- SRCForm p.1 — Form 982 must be attached to your income tax return (Form p.1).
- SRCInstructions p.4 — The estimated burden for preparing and sending the form to the IRS is 2 hr., 48 min. (Instructions p.4).
Common confusion points
What is qualified principal residence indebtedness?
It is your 'main home,' which is the home where you ordinarily live most of the time, and there can only be one main home at a time (Instructions p.3).
When do I file Form 982?
File it with your federal income tax return for the year a discharge of indebtedness was excluded from your income under section 108(a) (Instructions p.1).
What if I don't make an election on line 5 but check line 1c?
The debt discharge amount will be applied to reduce tax attributes in the order listed on lines 6 through 9, with remaining amounts going to lines 11a through 13 (Instructions p.2).
What is the maximum exclusion for qualified principal residence indebtedness?
The maximum is $750,000, unless you are married filing separately, in which case it is $375,000 (Instructions p.1).
Can I file Form 982 late?
Yes; if you timely filed without making certain elections, you can still make them by filing an amended return within 6 months of the due date (excluding extensions) (Instructions p.1).
What must be attached to Form 982 besides the form itself?
A description of the transactions that resulted in the nonrecognition of gain under section 1081 (Form p.1).
Workflow map
Related forms and next steps
Before
Current
After
Often used with
⚠ If something goes wrong
- If you miss a timely filing deadline, you can use an amended return to make elections regarding basis reduction (Instructions p.1).
Questions about IRS Form 982
What is IRS Form 982 used for?
This form documents situations where you are forgiven a debt, which usually means that amount gets added to your taxable income. By filing Form 982, you report this excluded amount and choose how it reduces specific tax benefits or the basis of your property. This ensures the IRS knows exactly how much income was avoided due to the debt discharge.
Who must file IRS Form 982?
Individuals who benefit from a discharge of indebtedness must file Form 982 with their federal income tax return for that year under section 108(a).
What information does IRS Form 982 require?
Part I of Form 982 indicates why an amount should be excluded from gross income, while Part II reports the reduction of specific tax attributes. Line 10a requires entering the smallest of three specified financial figures.
When is IRS Form 982 due?
Form 982 must be filed with your federal income tax return for the year a discharge of indebtedness occurs under section 108(a).
Where do I file IRS Form 982?
The form is filed with your federal income tax return, and elections regarding basis reduction (line 5) or qualified real property business indebtedness (line 1d) must be made on a timely filed return.
How do I complete IRS Form 982?
First, complete Part I to state why and how much debt is excluded from gross income. Second, determine if you will apply the discharge amount first to reduce depreciable property (line 5). Third, fill out Part II by reducing tax attributes in order, starting with Net Operating Loss (NOL) (lines 6 through 13, excluding line 10b), unless you check box 1d or make the election on line 5.
What happens if IRS Form 982 is filed incorrectly?
If you fail to make the election to reduce basis of depreciable property on line 5 when required, you may lose the ability to elect it later unless you file an amended return within 6 months of the due date.
What is qualified principal residence indebtedness?
It is your 'main home,' which is the home where you ordinarily live most of the time, and there can only be one main home at a time (Instructions p.3).
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