Form

982

(Rev. July 2013)

Department of the Treasury
Internal Revenue Service

Reduction of Tax Attributes Due to Discharge of

Indebtedness (and Section 1082 Basis Adjustment)
a

a Attach this form to your income tax return.

Information about Form 982 and its instructions is at www.irs.gov/form982.

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a
b
c
d
e
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General Information (see instructions)

Amount excluded is due to (check applicable box(es)):

Discharge of indebtedness in a title 11 case . . . . . . . . . . . . . . . . .
Discharge of indebtedness to the extent insolvent (not in a title 11 case) . . . . . . . .
Discharge of qualified farm indebtedness . . . . . . . . . . . . . . . . . .
Discharge of qualified real property business indebtedness . . . . . . . . . . . .
Discharge of qualified principal residence indebtedness . . . . . . . . . . . . .
Total amount of discharged indebtedness excluded from gross income . . . . . . . .
Do you elect to treat all real property described in section 1221(a)(1), relating to property held
customers in the ordinary course of a trade or business, as if it were depreciable property? . .

Part II

Attachment
Sequence No. 94

Identifying number

Name shown on return

Part I

. . .
. . .
. . .
. . .
. . .
.
2
for sale
. . .

7
8

Applied to reduce any general business credit carryover to or from the tax year of the discharge .
Applied to reduce any minimum tax credit as of the beginning of the tax year immediately after the
tax year of the discharge . . . . . . . . . . . . . . . . . . . . . . . . .
Applied to reduce any net capital loss for the tax year of the discharge, including any capital loss
9
carryovers to the tax year of the discharge . . . . . . . . . . . . . . . . . . .
10a Applied to reduce the basis of nondepreciable and depreciable property if not reduced on line 5.
DO NOT use in the case of discharge of qualified farm indebtedness . . . . . . . . . .
b Applied to reduce the basis of your principal residence. Enter amount here ONLY if line 1e is
checked . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
a

For a discharge of qualified farm indebtedness applied to reduce the basis of:
Depreciable property used or held for use in a trade or business or for the production of income if
not reduced on line 5 . . . . . . . . . . . . . . . . . . . . . . . . . .

b Land used or held for use in a trade or business of farming

to
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Yes

No

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6
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9
10a
10b

11a

11b

Other property used or held for use in a trade or business or for the production of income .

11c

12

Applied to reduce any passive activity loss and credit carryovers from the tax year of the discharge

12

13

Applied to reduce any foreign tax credit carryover to or from the tax year of the discharge .

13

Part III

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Reduction of Tax Attributes. You must attach a description of any transactions resulting in the reduction in
basis under section 1017. See Regulations section 1.1017-1 for basis reduction ordering rules, and, if applicable,
required partnership consent statements. (For additional information, see the instructions for Part II.)

Enter amount excluded from gross income:

4
For a discharge of qualified real property business indebtedness applied to reduce the basis of
depreciable real property
. . . . . . . . . . . . . . . . . . . . . . . .
That you elect under section 108(b)(5) to apply first to reduce the basis (under section 1017) of
5
depreciable property . . . . . . . . . . . . . . . . . . . . . . . . . .
6
Applied to reduce any net operating loss that occurred in the tax year of the discharge or carried
over to the tax year of the discharge . . . . . . . . . . . . . . . . . . . . .

11

OMB No. 1545-0046

Consent of Corporation to Adjustment of Basis of Its Property Under Section 1082(a)(2)

Under section 1081(b), the corporation named above has excluded $

from its gross income
and ending
.
for the tax year beginning
Under that section, the corporation consents to have the basis of its property adjusted in accordance with the regulations prescribed
under section 1082(a)(2) in effect at the time of filing its income tax return for that year. The corporation is organized under the laws
of

.
(State of incorporation)

Note. You must attach a description of the transactions resulting in the nonrecognition of gain under section 1081.
For Paperwork Reduction Act Notice, see page 5 of this form.

Cat. No. 17066E

Form 982 (Rev. 7-2013)

Page 2

Form 982 (Rev. 7-2013)

General Instructions

Purpose of Form

Section references are to the Internal Revenue Code unless

otherwise noted.

Generally, the amount by which you benefit from the discharge

of indebtedness is included in your gross income. However,
under certain circumstances described in section 108, you can
exclude the amount of discharged indebtedness from your
gross income.

Future developments. For the latest information about

developments related to Form 982 and its instructions, such as
legislation enacted after they were published, go to
www.irs.gov/form982.

You must file Form 982 to report the exclusion and the
reduction of certain tax attributes either dollar for dollar or 331/3
cents per dollar (as explained below).

How To Complete the Form

IF the discharged debt
you are excluding is . . .
Qualified principal
residence indebtedness

THEN follow these steps . . .

1. Be sure to read the definition of qualified principal residence indebtedness in the instructions for line 1e on page
4. Part or all of your debt may not qualify for the exclusion on line 1e but may qualify for one of the other exclusions.
2. Check the box on line 1e.
3. Include on line 2 the amount of discharged qualified principal residence indebtedness that is excluded from gross
income. Any amount in excess of the excluded amount may result in taxable income. See Pub. 4681 for more
information. If you disposed of your residence, you may also be required to recognize a gain on its disposition. For
details, see Pub. 523, Selling Your Home.
4. If you continue to own your residence after the discharge, enter on line 10b the smaller of (a) the amount of
qualified principal residence indebtedness included on line 2 or (b) the basis (generally, your cost plus improvements)
of your principal residence.

!
F
CAUTION

A nonbusiness debt (other

than qualified principal
residence indebtedness,
such as a car loan or credit
card debt)

If the discharge occurs in a title 11 case, you cannot check box 1e. You must check box 1a and
complete the form as discussed below under A nonbusiness debt. If you are insolvent (and not in a title
11 case), you can elect to follow the insolvency rules by checking box 1b instead of box 1e and
completing the form as discussed below under A nonbusiness debt.

Follow these instructions if you do not have any of the tax attributes listed in Part II (other than a basis in
nondepreciable property). Otherwise, follow the instructions for Any other debt below.
1. Check the box on line 1a if the discharge was made in a title 11 case (see Definitions on page 3) or the box on line
1b if the discharge occurred when you were insolvent (see Line 1b on page 3).
2. Include on line 2 the amount of discharged nonbusiness debt that is excluded from gross income. If you were
insolvent, do not include more than the excess of your liabilities over the fair market value of your assets.
3. Include on line 10a the smallest of (a) the basis of your nondepreciable property, (b) the amount of the
nonbusiness debt included on line 2, or (c) the excess of the aggregate bases of the property and the amount of
money you held immediately after the discharge over your aggregate liabilities immediately after the discharge.

Any other debt

Use Part I of Form 982 to indicate why any amount received from the discharge of indebtedness should be excluded
from gross income and the amount excluded.
Use Part II to report your reduction of tax attributes. The reduction must be made in the following order unless you
check the box on line 1d for qualified real property business indebtedness or make the election on line 5 to reduce
basis of depreciable property first.
1. Any net operating loss (NOL) for the tax year of the discharge (and any NOL carryover to that year) (dollar for
dollar);
2. Any general business credit carryover to or from the tax year of the discharge (331/3 cents per dollar);
3. Any minimum tax credit as of the beginning of the tax year immediately after the tax year of the discharge (331/3
cents per dollar);
4. Any net capital loss for the tax year of the discharge (and any capital loss carryover to that tax year) (dollar for
dollar);
5. The basis of property (dollar for dollar);
6. Any passive activity loss (dollar for dollar) and credit (331/3 cents per dollar) carryovers from the tax year of the
discharge; and
7. Any foreign tax credit carryover to or from the tax year of the discharge (331/3 cents per dollar).
Use Part III to exclude from gross income under section 1081(b) any amounts of income attributable to the transfer
of property described in that section.

Page 3

Form 982 (Rev. 7-2013)

Certain individuals may need to complete only a few

lines on Form 982. For example, if you are completing
this form because of a discharge of indebtedness on
a personal loan (such as a car loan or credit card
debt) or a loan for the purchase of your principal residence,
follow the chart on page 2 to see which lines you need to
complete. Also, see Pub. 4681, Canceled Debts, Foreclosures,
Repossessions, and Abandonments, for additional information
including many examples and sample forms.

TIP

Check the box on line 1b if the discharge of indebtedness

occurred while you were insolvent. You were insolvent to the
extent that your liabilities exceeded the fair market value (FMV)
of your assets immediately before the discharge. For details and
a worksheet to help calculate insolvency, see Pub. 4681.

Definitions

Example. You were released from your obligation to pay your

credit card debt in the amount of $5,000. The FMV of your total
assets immediately before the discharge was $7,000 and your
liabilities were $10,000. You were insolvent to the extent of
$3,000 ($10,000 of total liabilities minus $7,000 of total assets).
Check the box on line 1b and include $3,000 on line 2.

Title 11 Case

Line 1c

A title 11 case is a case under title 11 of the United States Code

(relating to bankruptcy), but only if you are under the jurisdiction
of the court in the case and the discharge of indebtedness is
granted by the court or is under a plan approved by the court.

Check this box if the income you exclude is from the discharge
of qualified farm indebtedness. The exclusion relating to
qualified farm indebtedness does not apply to a discharge that
occurs in a title 11 case or to the extent you were insolvent.

Discharge of Indebtedness

Qualified farm indebtedness is the amount of indebtedness

incurred directly in connection with the trade or business of
farming. In addition, 50% or more of your aggregate gross
receipts for the 3 tax years preceding the tax year in which the
discharge of such indebtedness occurs must be from the trade
or business of farming. For more information, see sections
108(g) and 1017(b)(4).

The term discharge of indebtedness conveys forgiveness of, or

release from, an obligation to repay.

When To File
File Form 982 with your federal income tax return for a year a
discharge of indebtedness is excluded from your income under
section 108(a).
The election to reduce the basis of depreciable property
under section 108(b)(5) and the election made on line 1d of Part
I regarding the discharge of qualified real property business
indebtedness must be made on a timely filed return (including
extensions) and can be revoked only with the consent of the
IRS.
If you timely filed your tax return without making either of
these elections, you can still make either election by filing an
amended return within 6 months of the due date of the return
(excluding extensions). Write Filed pursuant to section
301.9100-2 on the amended return and file it at the same place
you filed the original return.

Specific Instructions
Part I
The American Recovery and Reinvestment Act of 2009 allows
certain businesses to elect under section 108(i) to defer and
include ratably over a 5-taxable-year period, beginning with the
taxpayer's fourth or fifth taxable year following the taxable year
of the reacquisition, any income from the discharge of business
debt arising from the reacquisition of certain types of business
debt repurchased in 2009 and 2010. For more details, including
how to make this election, see section 108(i) and Rev. Proc.
2009-37, 2009-36 I.R.B. 309, available at www.irs.gov/
irb/2009-36_IRB/ar07.html.
If you made an election under section 108(i) to defer
income from the discharge of business debt arising
from the reacquisition of a debt instrument, you
CAUTION
cannot exclude on lines 1a through 1d the income
from the discharge of such indebtedness for the taxable year of
the election or any subsequent taxable year.

!
F

Line 1b
The insolvency exclusion does not apply to any discharge that
occurs in a title 11 case. It also does not apply to a discharge of
qualified principal residence indebtedness (see the instructions
for line 1e on page 4) unless you elect to have the insolvency
exclusion apply instead of the exclusion for qualified principal
residence indebtedness.

The discharge must have been made by a qualified person.

Generally, a qualified person is an individual, organization, etc.,
who is actively and regularly engaged in the business of lending
money. This person cannot be related to you, be the person
from whom you acquired the property, or be a person who
receives a fee with respect to your investment in the property. A
qualified person also includes any federal, state, or local
government or agency or instrumentality thereof.
If you checked line 1c and did not make the election on line 5,
the debt discharge amount will be applied to reduce the tax
attributes in the order listed on lines 6 through 9. Any remaining
amount will be applied to reduce the tax attributes in the order
listed on lines 11a through 13.
You cannot exclude more than the total of your (a) tax
attributes (determined under section 108(g)(3)(B)) and (b) basis
of property used or held for use in a trade or business or for the
production of income. Any excess is included in income.

Line 1d
If you check this box, the discharge of qualified real property
business indebtedness is applied to reduce the basis of
depreciable real property on line 4. The exclusion relating to
qualified real property business indebtedness does not apply to
a discharge that occurs in a title 11 case or to the extent you
were insolvent.
Qualified real property business indebtedness is indebtedness
(other than qualified farm indebtedness) that (a) is incurred or
assumed in connection with real property used in a trade or
business, (b) is secured by that real property, and (c) with
respect to which you have made an election under this
provision. This provision does not apply to a corporation (other
than an S corporation).
Indebtedness incurred or assumed after 1992 is not qualified
real property business indebtedness unless it is either (a) debt
incurred to refinance qualified real property business
indebtedness incurred or assumed before 1993 (but only to the
extent the amount of such debt does not exceed the amount of
debt being refinanced) or (b) qualified acquisition indebtedness.

Page 4

Form 982 (Rev. 7-2013)

Qualified acquisition indebtedness is (a) debt incurred or

assumed to acquire, construct, reconstruct, or substantially
improve real property that is secured by such debt and (b) debt
resulting from the refinancing of qualified acquisition
indebtedness to the extent the amount of such debt does not
exceed the amount of debt being refinanced.
You cannot exclude more than the excess of the
outstanding principal amount of the debt (immediately before
the discharge) over the net FMV (as of that time) of the
property securing the debt reduced by the outstanding principal
amount of other qualified real property business indebtedness
secured by that property (as of that time). The amount excluded
is further limited to the aggregate adjusted basis (as of the first
day of the next tax year or, if earlier, the date of disposition) of
depreciable real property (determined after any reductions
under sections 108(b) and (g)) you held immediately before the
discharge (other than property acquired in contemplation of the
discharge). Any excess is included in income.

Line 1e
Check this box if the income you exclude is from discharge of
qualified principal residence indebtedness. Also, be sure you
complete line 2 (and line 10b if you continue to own the
residence after discharge). However, if the discharge occurs in a
title 11 case, you must check the box on line 1a and not this
box. If you are insolvent (and not in a title 11 case), you can
elect to follow the insolvency rules by checking box 1b instead
of checking this box. For more information, see Pub. 4681.
Principal residence. Your principal residence is your main
home, which is the home where you ordinarily live most of the
time. You can have only one main home at any one time.
Qualified principal residence indebtedness. This
indebtedness is a mortgage you took out to buy, build, or
substantially improve your main home. It also must be secured
by your main home. If the amount of your original mortgage is
more than the cost of your main home plus the cost of any
substantial improvements, only the debt that is not more than
the cost of your main home plus improvements is qualified
principal residence indebtedness. Any debt secured by your
main home that you use to refinance qualified principal
residence indebtedness is treated as qualified principal
residence indebtedness, but only up to the amount of the old
mortgage principal just before the refinancing. Any additional
debt you incurred to substantially improve your main home is
also treated as qualified principal residence indebtedness.
Amount eligible for the exclusion. The exclusion applies only
to debt discharged after 2006. The maximum amount you can
treat as qualified principal residence indebtedness is $2 million
($1 million if married filing separately). You cannot exclude from
gross income discharge of qualified principal residence
indebtedness if the discharge was for services performed for the
lender or on account of any other factor not directly related to a
decline in the value of your residence or to your financial
condition.
Ordering rule. If only a part of a loan is qualified principal
residence indebtedness, the exclusion applies only to the extent
the amount discharged exceeds the amount of the loan
(immediately before the discharge) that is not qualified principal
residence indebtedness. For example, assume your main home
is secured by a debt of $1 million, of which $800,000 is qualified
principal residence indebtedness. If your main home is sold for
$700,000 and $300,000 of debt is discharged, only $100,000 of
the debt discharged can be excluded (the $300,000 that was
discharged minus the $200,000 of nonqualified debt). The
remaining $200,000 of nonqualified debt may qualify in whole or
in part for one of the other exclusions, such as the insolvency
exclusion.

Line 2
Enter the total amount excluded from your gross income due to
discharge of indebtedness under section 108. If you checked
any box on lines 1b through 1e, do not enter more than the limit
explained in the instructions for those lines. If you checked line
1a, 1b, or 1c, this amount will not necessarily equal the total
reductions on lines 5 through 13 (excluding line 10b) because
the debt discharge amount may exceed the total tax attributes.
If you checked line 1e, this amount will not necessarily equal the
total basis reduction on line 10b (which is required only if you
continue to own the residence after the discharge).
See section 382(l)(5) for a special rule regarding a reduction of
a corporations tax attributes after certain ownership changes.

Line 3
You can elect under section 1017(b)(3)(E) to treat all real
property held primarily for sale to customers in the ordinary
course of a trade or business as if it were depreciable property.
This election does not apply to the discharge of qualified real
property business indebtedness. To make the election, check
the Yes box.

Part II
Basis Reduction
If you check any of the boxes on lines 1a through 1c, you can
elect, by completing line 5, to apply all or a part of the debt
discharge amount to first reduce the basis of depreciable
property (including property you elected on line 3 to treat as
depreciable property). Any balance of the debt discharge
amount will then be applied to reduce the tax attributes in the
order listed on lines 6 through 13 (excluding line 10b). You must
attach a statement describing the transactions that resulted in
the reduction in basis under section 1017 and identifying the
property for which you reduced the basis. If you do not make
the election on line 5, complete lines 6 through 13 (excluding
line 10b) to reduce your attributes. See section 1017(b)(2) and
(c) for limitations of reductions in basis on line 10a.

Line 7
If you have a general business credit carryover to or from the tax
year of the discharge, you must reduce that carryover by 331/3
cents for each dollar excluded from gross income. See Form
3800, General Business Credit, for more details on the general
business credit, including rules for figuring any carryforward or
carryback.

Line 10a
In the case of a title 11 case or insolvency, the reduction in
basis is limited to the aggregate of the basis of your property
immediately after the discharge over the aggregate of your
liabilities immediately after the discharge. However, this limit
does not apply to a reduction in basis reported on line 5
pursuant to section 108(b)(5).

Line 10b
If box 1e is checked and you continue to own the residence
after discharge, enter the smaller of:
The part of line 2 that is attributable to the exclusion of
qualified principal residence indebtedness, or
The basis of your main home.

Form 982 (Rev. 7-2013)

Part III
Adjustment to Basis
Unless it specifically states otherwise, the corporation, by filing
this form, agrees to apply the general rule for adjusting the basis
of property (as described in Regulations section 1.1082-3(b)).
If the corporation desires to have the basis of its property
adjusted in a manner different from the general rule, it must
attach a request for variation from the general rule. The request
must show the precise method used and the allocation of
amounts.
Consent to the request for variation from the general rule will
be effective only if it is incorporated in a closing agreement
entered into by the corporation and the Commissioner of
Internal Revenue under the rules of section 7121. If no
agreement is entered into, then the general rule will apply in
determining the basis of the corporations property.

Page 5

Paperwork Reduction Act Notice. We ask for the information

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section 6103.
The time needed to complete and file this form will vary
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for individual taxpayers filing this form is approved under OMB
control number 1545-0074 and is included in the estimates
shown in the instructions for their individual income tax return.
The estimated burden for all other taxpayers who file this form is
shown as follows: Recordkeeping, 5 hr., 58 min.; Learning
about the law or the form, 2 hr., 34 min.; Preparing and
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If you have comments concerning the accuracy of these time
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