1099-C cancellation of Debt

[mircpa]

Hello all

My client received 1099-C cancellation of debt for his primary residence to amount of 172K for year 2013 after filing tax return. My question, is 1040X still required even if there is no change in taxable income, i would be filing 982.

thanks

[kcjenkins]

i WOULD FILE IT, OTHERWISE IN ANOTHER YEAR OR TWO HE'LL BE GETTING A CP2000.

[SaraEA]

Unless you file, the IRS doesn't know it's the taxpayer's primary residence and qualifies for the exclusion. Kind of like when someone sells $100k stock at a loss.  The IRS computers assume it's all income unless a Sch D shows otherwise.

[mircpa]

With scenario described above, why should I be attaching schedule D ? From what I understand I would include 1040X with no changes and form 982 under part 1 box 1 e checked and amount of discharged debt 172K goes on line 2. Correct me if I am wrong

[jklcpa]

Sara mentioned Sch D only because her example related to how an unreported stock sale would trigger the CP2000.

 

I agree that you should file the 1040X to document the discharged debt.

[Pacun]

File 1040X and 982