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Entering Form 1099-C with insolvency (Form 982) in Lacerte

SOLVEDby IntuitLacerte Tax149Updated 3 weeks ago

This article will assist you with entering a Form 1099-C with insolvency in the Individual module of Lacerte.

First, you need to determine if you need to report the 1099-C—and how you need to report it. After that, you can use the steps below to enter 1099-C in Lacerte.

Refer to IRS Topic No. 431 to determine whether a debt cancelation is taxable.

 

Refer to this article for instructions on generating Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness.

Follow these steps to enter Form 1099-C as nontaxable:

  1.  Go to Screen 14.1, SS Benefits, Alimony, Miscellaneous Inc.
  2. Scroll down to the Alimony and Other Income section.
  3. Enter the Cancelation of debt (1099-C) as a positive amount.
  4. Enter the same amount as a negative amount in Other income (Ctrl+E).
    • For example, if the amount you entered for step 3 was 5,000, you should enter -5,000 for step 4.
    • This will generate a statement on Form 1040, line 8. The statement will show the amounts you enter for steps 3 and 4 offsetting each other.

Follow these steps to reduce a capital loss for Schedule D:

  1. Go to Screen 17, Dispositions.
  2. Scroll down to the Overrides section.
  3. Enter net amount of loss after insolvency in Total gain (loss) [O].

Follow these steps to enter a portion of Form 1099-C as taxable and the rest as nontaxable:

  1. Go to Screen 14.1, SS Benefits, Alimony, Miscellaneous Inc.
  2. Scroll down to the Alimony and Other Income section.
  3. Enter the Cancelation of debt (1099-C) as a positive amount.
  4. Enter the nontaxable portion as a negative amount in Other income (Ctrl+E).

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