We Prepare Tax Returns!

We prepare most type of tax returns:

Individual. 

S Corporation.

C Corporation.

Partnership.

Payroll.

Amended.

Gary Bode, CPA is a Master's Degreed, nation wide accountant offering tax and business services. Member of AICPA and NCACPA. Our virtual office provides excellent service to long distance and international clients. Call (910) 399-2705 for a free phone consult.

Client Video Testimonials

Click here to watch some of our clients in their video testimonials!

Client Testimonials

I used Gary’s services to file my 2012 income tax return. This was my first year having an accountant do my return, as I have always done it myself using TurboTax. However, this year I had cancelled debt from my old primary residence which I was forced to convert to a rental property after relocating out of state.

While it didn’t cost me anything to do the short sale, the income tax consequence from the cancelled debt, roughly $50,000 in my case, was enough to move me from the 15% tax bracket to the 25% tax bracket.  Needless to say, I was concerned about that.

Finances were already tight and my husband and I are expecting our first child this fall. So the possibility of owing income tax was stressing me out. However, Gary was great at relieving my fears.

He is extremely knowledgeable, answered all my questions and was very thorough. I knew I was in good hands. He kept in constant contact with me throughout the process, keeping me updated on the progress of my return and letting me know what paperwork he needed to complete my filing.

In my mind, best case scenario would have been to not owe any taxes. Second best would be to only owe a little. Well, you can imagine my surprise and delight when Gary told me I was actually due a refund of a little over $2,700.00!

To top it all off, I found Gary’s fee for service to be fair, competitive and affordable; especially given the complexity of this type of return. I am so glad I did not try and go it alone this year. I am extremely pleased with Gary’s service and would recommend him highly to anyone, in fact I already have. If you have cancelled debt from a short sale or foreclosure, don’t freak out. Take a deep breath and call or email Gary. I am grateful I did.

Angie Falke of Holiday, FL

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Even though Gary enjoys helping colleagues, we no longer provide free consults to other tax preparers. He's happy to consult on an hourly billing basis if our schedule allows.

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Cancellation of Debt CPA answers FAQs on Form 982 | insolvency, student loan cancellation of debt, tax attributes of Form 982, Form 1099-C, Form 1099-A, credit card debt cancellation, loan modifications, non-recourse loans

Cancellation of Debt CPA Form 982

My advice is to exploit every avenue on Form 982 before paying taxes on cancellation of debt. (910) 399-2705.

Cancellation of debt CPAs field lots of questions on  IRS Form 982 issues. So here’s the FAQ list. If you get uncomfortable preparing Form 982, consider calling us for a free consult.

Can I use Form 982 to exclude student loan cancellation of debt from becoming taxable income?

Yes. Probably through the insolvency or bankruptcy conduits of Form 982.

Does cancelled credit card debt qualify for Form 982?

Yes. I see some tax positioning opportunities lost with clients using debt consolidation companies to battle the credit card companies. Talk to them about tax consequences of cancelled credit card debt.

What’s a non-recourse loan?

Several sections of Form 982, including insolvency, distinguish between recourse and non-recourse loans. A non-recourse loan means the bank can only take the collateral if you default and can’t come after you personally.

What’s the tax attributes section of Form 982 about?

Well the IRS doesn’t offer a free lunch with debt cancellation. If you have other assets, covered by the tax attributes section of Form 982, you must adjust the basis of them. That means you’re more likely to pay tax on a gain, if you sell them. But CPAs say the next best thing to paying no tax is paying the tax later. Just be sure to discuss the implication of adjusting the tax attributes with your Form 982 CPA. Some tax positioning opportunities exist.

Will Cancellation of Debt for a primary residence still be a “gimme” on Form 982 in 2013?

So far, the answer is no. I expect Congress will extend that provision, but opinions differ. You can still use the insolvency conduit of Form 982.

Is a loan modification cancellation of debt?

It can be.

What’s the insolvency component of Form 982?

Insolvency is the best known conduit on Form 982. Clients get this confused with bankruptcy, which is another Form 982 conduit. The IRS calculation for insolvency can get tricky. Read the Form 982 directions and Publication 4681 carefully.

Does Form 1099-A mean there’s cancellation of debt?

No. Form 1099-A doesn’t make the amount in Box 2 debt cancellation. So the lender can still pursue you. Form 1099-A means ownership of an asset changed hands. So you essentially have an IRS reportable sale. And you may have to pay taxes on a gain. But more likely, you’ll have a loss.

Does Form 1099-A mean there’s going to be a Form 1099-C eventually?

Probably yes. Since the Form 1099-C comes later, after your financial condition improves, Clients have a higher chance of cancelled debt becoming taxable income despite the use of Form 982.

Does cancelled debt on Form 1099-C always become taxable income?

Cancellation of debt, as reported on Form 1099-C, becomes taxable income unless you can exclude it through Form 982. Form 982 has multiple conduits. You may be able to exclude all the debt cancellation, none of the debt cancellation or some of the debt cancellation.

“You can amend a earlier tax return to include Form 982 if Form 1099-C arrives late, or you jumped the gun and included cancellation of debt in your taxable income before exhausting every conduit on Form 982.” 
– Gary Bode, cancellation of debt CPA and tax accountant

Is Form 1099-C always correct?

No. But the IRS thinks it is. If your lender won’t issue a corrected Form 1099-C, we sometimes carefully document the correct amount of debt cancellation and submit supplemental evidence with Form 982.

Please read any of our many cancellation of debt postings on this website to help you gauge our abilities. We can help with Form 982 wherever you live through our virtual office. (910) 399-2705.

Here’s a link to detailed examples of cancelled credit card debt tax reporting including Form 982.

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