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I am preparing a 2018 tax return for a client. She received a Form 1099-C for $54,000 because the bank foreclosed on her home in 2018.
Is this reported as income, or can I complete Form 982 and exclude the gain? (She had no W-2 income for 2018 - unemployed all year.)
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"There is no exclusion for qualified principal residence indebtedness discharged in 2018 unless the discharge is subject to an arrangement that was entered into and evidenced in writing before January 1, 2018. Generally, the amount by which you benefit from the discharge of indebtedness is included in your gross income".
You can still file form 982 under rules of insolvency or bankruptcy
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You may want to wait a bit - New RETROACTIVE laws are on the way
Here's wishing you many Happy Returns
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Great call - thanks!