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We prepare most type of tax returns:


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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.

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Client Testimonials

I became totally and permanently disabled after a working for 44 years. I returned to college late in life (while working full-time) to fulfill my dream of becoming an RN and at that time found it necessary to secure student loans. Three years after being declared totally and permanently disabled my student loans were discharged. In January 2013 we received a 1099-C form declaring said student loans that were discharged however that amount could be considered as income for 2012. This was a large amount of money and we live on two pensions and social security income.

I started looking on the internet for information regarding 1099-C and felt that this was something that we could not handle alone. I made phone calls locally to a very reputable tax group in a city near us and they said it would cost $500 for an appointment and that they really prefer to do corporate taxes and they referred me to a local person who had worked for them at one time, we called and explained the situation and an appointment was made and then the comment was made that "I will have to do some research on this" and flags immediately went up and we called back and cancelled that appointment. I had been researching the IRSwebsite and every place else I could think of and I was not comfortable doing our own taxes this year. We called another local tax preparer that we had used in the past and made an appointment, however prior to the appointment, while still seeking information regarding our situation,

I came across a website for Gary l. Bode, MSA, CPA, PC in Wilmington, NC. I called Mr. Bodeand explained our situation and asked if he could help. He spoke very knowledgeably regarding the situation and stated that yes; he felt he could help us. As Mr. Bode was in North Carolina and we were in New York I scanned all of our documents including back-up documents for all of our claims and forwarded all to him. Mr. Bode kept in touch with us via email; we have spoken on the telephone several times and have become very comfortable with his knowledge and professionalism. Also, as I am a true "worrier" I have continued looking into information regarding our tax situation and I came upon another web page for Mr. Bode that included testimonials which spoke of his experience with this type of tax situation as it became prevalent during the recession. This reinforced in our minds that we had made the right decision in hiring this person as our tax preparer.

I share all of this as our taxes are now ready to be filed (we do owe tax for 2012 but not the astronomical figure we thought we were facing), and we are confident that they have been prepared with the utmost care by a gentleman who has an excellent working knowledge of the situation we faced and the tax laws that were applicable to said situation.


Bill and Carol

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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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Form 982 CPA explains Form 1099-C and Form 1099-A | Insolvency and Cancelled Debt

Form 982 suggestions on cancelled debt and insolvency

Gary Bode, CPA: many folks self prepare Form 982. Here are some suggestions. (910) 399-2705.

As a Form 982 CPA, I often speak with folks who plan to self-prepare their tax returns. But about half of my cancelled debt cases involve amending a previous return prepared by the client. Form 982 issues get complex fast.

So here are some suggestions if you self-prepare Form 982.

Typical Cancelled Scenario with Form 1099-C, Form 982 and Insolvency

  • Your credit card company writes off $5,000. The $5,000 is cancelled debt.
  • The credit card company sends both you and the IRS a Form 1099-C.
  • The IRS assumes the Form 1099-C is correct
  • Form 1099-C helps the bank reconcile their bad debt expense on its tax return. That’s why I always assume they’ll issue Form 1099-C, eventually anyway.
  • The $5000 becomes taxable income , ouch.
  • You try to exclude cancelled from taxable income through Form 982. In this case you’d probably use the Insolvency component of Form 982.
  • Cancelled debt appears on Line 21 of Form 1040.

Here are a few earlier posting on cancelled debt, insolvency, Form 982, Form 1099-C and Form 1099-A

Remember each cancelled debt case is unique. These posts are generic and don’t factor in your specific fact pattern.

 Factors to Consider for Self Preparation of Form 982

  • Read over the instructions for Form 982. Read the associated IRS Publications. They give good examples.
  • Don’t go to a tax chain. Their preparers rely solely on the software. You’re better off doing it yourself with Turbo Tax.
  • A rule of thumb? Estimate the additional tax due as 30% of the cancelled debt. The additional potential tax liability with cancelled debt is significant.
  • Remember the IRS often has different definitions for common financial terms e.g. insolvency.
  • Anticipate the arrival of Form 1099-C and Form 1099-A. Don’t assume it wasn’t sent. Otherwise you’ll receive an IRS Notice CP 2000 or IRS Letter 566 months, or even years, later. Ouch.
  • Don’t assume the Form 1099-C is correct. One example; credit card companies sometimes list the date of cancellation as 12/31. If the debt was cancelled in February, your financial position hopefully improved by 12/31. If so, the insolvency aspect of Form 982 excludes less cancelled debt.
  • Never assume you can’t exclude cancelled debt on Form 982. Try another approach. Sometimes clients qualify through multiple provisions of Form 982.
  • If you’re amending a prior return, pull your IRS file to see what info they have on you.
  • With short sales and foreclosures, remember you have a capital gains transaction in addition to the cancelled debt.
  • The IRS assumes the cancelled debt is taxable income. You must prove it qualifies to be excluded through Form 982.
  • Assume you will be audited. Organize your records such that you can support every figure on Form 982.
  • The IRS is skeptical about Form 982. We generally provide clear and concise explanations along with supporting documents.
  • The average client who prepares their own taxes gets good at it. They do it every year and their circumstances don’t change much. But this experience doesn’t prepare you Form 982, which is a new experience. Many clients tell me other CPAs don’t even prepare Form 982.

The Tradeoff between Aggravation and Cost

Our price for Form 982 varies between $125 and $350, plus the cost of the base tax return. The cost driver on Form 982 cost is your ability to give us information. So being organized decreases your costs. We don’t prepare Form 982 by itself; we only include it as part of our preparation for the entire tax return. Figure in the cost of Turbo Tax, your time and aggravation to help gauge whether the cost of us doing it is worthwhile. (910) 399-2705.

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2 comments to Form 982 CPA explains Form 1099-C and Form 1099-A | Insolvency and Cancelled Debt

  • Melissa

    I recently applied for a deed in lieu with my bank. I bought the property with a coborrower to whom I am not married to. When the 1099c and 982come, can I file both of them with my taxes since it was my primary residence

    • Hi Melissa. I think other issues come into play here. Like whose cancelled debt is it? My guess, based on your question, is no, the co borrower would have to claim 50% (?) on their tax return. A taxpayer can’t assume taxable issues if they’re for another individual (generally speaking). Hope that helps.

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