Cancelled debt for year 2002

[cientax]

Client has IRS after him since he has not filed 2002. He has cancellation of debt in 2002 for $97,000 on 1099C. He has 1099A with FMV of $125,000. Doing the worksheet in the publication, it comes out that he has no taxable income from cancellation of debt, but the only worksheet I have is in the 2007 publication. Does anyone have the pub for 2002 with the worksheet. I know there is a new law for mortgage debt relief but it only applies to 2007, 2008, and 2009.

[jainen]

>>the only worksheet I have is in the 2007 publication<<

Do you mean Table 1-2 in Pub 544, Worksheet for Foreclosures and Repossessions? That should be the same for 2002. But you'll have to figure out exactly what the 1099-A and 1099-C are saying. Although it would seem the value of the property covered the amount owing, the lender was not supposed to count sales proceeds in the canceled debt.

You can't make assumptions about a non-filer with a large tax bill already in collections. This engagement will likely involve more work than simply filing a tax return, so be sure to price it accordingly.

[Slappy Tax]

This might be what you're looking for:

http://www.irs.gov/pub/irs-prior/p544--2002.pdf