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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 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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Insolvency CPA explains the Cancelled Debt exclusion process on Form 982 | Form 1099-C

Insolvency CPA Wilmington NC

Gary Bode, CPA: if you need help with Form 982, call for a free phone consult at 399-2705.

Hi, I’m Gary Bode, an insolvency CPA with a virtual office to help long distance folks deal with cancelled debt and Form 982. My physical office is in Wilmington NC.

What is Cancelled Debt?

Cancelled debt occurs when your financial institution “forgives” part of a loan. In 2012, typical scenarios include mortgage foreclosure, short sales, car re-possessions, decreased credit card payoffs, etc.


The bank reports the amount of cancelled debt, and when it was cancelled, to both you and the IRS on Form 1099-C.

Cancelled Debt automatically becomes Taxable Income

If you do nothing, cancelled debt becomes taxable income on the company’s tax return or an individual’s Form 1040.

Form 982 to the Rescue

You have a right to prevent cancelled debt becoming taxable income by exempting or excluding it on Form 982. Cancelled Debt CPAs say excluding some cancelled debt is better than excluding no cancelled debt. How much tax liability can you save? A rule of thumb says 25% of cancelled debt excluded. Remember that’s rough figure for a complex calculation! The basic IRS guideline? You may exclude cancelled debt to the extent you were insolvent immediately before the debt was cancelled.

Insolvency CPA

Insolvency became a practice niche for CPAs a few years ago. Unfortunately, we’re still needed in 2012. The IRS means well on Form 982 but it covers multiple situations, and is tricky to navigate. And especially with companies, the insolvency calculation is only part of the tax preparation. Form 982 repercussions ripple though other areas of the tax return. Insolvency CPAs arose to handle this specialized tax snake pit.

Form 1099-C Precautions

  • Look for your Form 1099-C. Sometimes banks only mail a copy to the IRS.
  • Act on the 1099-C. Include it into your tax return. Not doing so guarantees an IRS audit.
  • Make sure the amount is correct. You have a right to understand how much the bank wrote off and how they calculated it. If you have trouble getting an answer, calling an insolvency CPA, or perhaps an attorney, is prudent.
  • Make sure the date is correct. Often banks use December 31st, perhaps for convenience. But the Form 982 calculations are based on the actual date. If you had a short sale in February because you were insolvent, maybe you’re not as insolvent on December 31st, so less cancelled debt can be excluded.

Can I amend my past Tax Return if I didn’t use Form 982?

Yes, up to the IRS time limit.

I’m an insolvency CPA because the IRS rightfully allows some relief from cancelled debt taxation but makes the Form 982 process so complex. For a free phone consult, call (910) 399-2705.

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