Form 982

[Crank]

I am filing form 982 "Discharge of Indebtedness" for a client who had cancelled credit card debt of $40+K. Since the client is/was insolvent ( -$121,000) at the time of the cancelled debt it is excluded from income. I havent found anything preventing efiling of this return but I was wondering if it would be better or worse to paper file and include the clients "Statement of Net Worth" detailing the insolvency? I havent found anything in the instructions requiring submission of proof of insolvency but Im sure they will ask for it at some time.

[Kimberly K]

I have seen it go both ways, sometimes the IRS ask for the statement after it has been filed. I usually send it in efile without sending anything other than the return that includes the 982. If they ask for it later then I send it in. Whatever you prefer.

[kcjenkins]

The practical point is that the person processing the original return will not read it, and even if they did, they are not the one with the decision making authority. So it's really pointless to send it. If they want it they will write and ask for it, anyway.

[Crank]

Thanks for the replies! I guess Ill just efile the return and wait and see.