1099-C primary residence mortgage forgiveness

[Janitor Bob]

Client had $24,000 primary residence mortgage debt cancelled in 2020 (1099-C).  I know I use Form 982, but for IRS matchng purposes, do I also need to add the cancelled debt as misc income on the 1040 as a positive then as a negative to zero out....or only on the 982?

[WITAXLADY]

That is how I do it - but I think the line 21 or whatever the new line is needs to be added as an attachment as I routinely get an IRS request to explain away the canceled debt

D from WI...

[Janitor Bob]

2 minutes ago, WITAXLADY said:

That is how I do it - but I think the line 21 or whatever the new line is needs to be added as an attachment as I routinely get an IRS request to explain away the canceled debt

D from WI...

What do you mean by "added as attachment"?  On the worksheet for Line 8 (Other income), I was going to include the amount with description of "1099-C Cancelled Debt" then also as a negative amount with description (Form 982 Debt forgiveness exclusion"...Then also include the Form 982.

[mwrightea]

Put it on  Line 8 Schedule 1 and deduct it on Line 22 Schedule 1 of the 1040 if it qualifies.

[Max W]

Only form 982 is needed if all the debt is excluded.   Ten or 12 years ago when the housing market crashed, we filed a lot of COD's in the several hundred thousand $ range and there was never any issue with the IRS.   I think the highest amount was over $800K.

[Lion EA]

Max, I think I have one coming up. If COD but liabilities exceeded assets by less than the COD, we still use Form 982, yes? With lots of detail? Just totals and keep backup?