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H & R Block Free Tax Calculator

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H & R Block Free Tax Calculator

H & r block free tax calculator Publication 907 - Introductory Material Table of Contents Future Developments IntroductionOrdering forms and publications. H & r block free tax calculator Tax questions. H & r block free tax calculator Future Developments For the latest information about developments related to Publication 907, such as legislation enacted after this publication was published, go to www. H & r block free tax calculator IRS. H & r block free tax calculator gov/pub907. H & r block free tax calculator    Introduction This publication gives you a brief introduction to certain parts of the tax law of particular interest to people with disabilities and those who care for people with disabilities. H & r block free tax calculator It includes highlights about: Income, Itemized deductions, Tax credits, Household employers, and Business tax incentives. H & r block free tax calculator You will find most of the information you need to complete your tax return in your form instruction booklet. H & r block free tax calculator If you need additional information, you may want to order a free tax publication. H & r block free tax calculator You may also want to take advantage of the other free tax help services that the IRS provides. H & r block free tax calculator See How To Get Tax Help , at the end of this publication, for information about getting publications, forms, and free tax services. H & r block free tax calculator Comments and suggestions. H & r block free tax calculator   We welcome your comments about this publication and your suggestions for future editions. H & r block free tax calculator   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. H & r block free tax calculator NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. H & r block free tax calculator Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. H & r block free tax calculator   You can send your comments from www. H & r block free tax calculator irs. H & r block free tax calculator gov/formspubs/. H & r block free tax calculator Click on “More Information” and then on “Comment on Tax Forms and Publications”. H & r block free tax calculator   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. H & r block free tax calculator Ordering forms and publications. H & r block free tax calculator   Visit www. H & r block free tax calculator irs. H & r block free tax calculator gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. H & r block free tax calculator Internal Revenue Service 1201 N. H & r block free tax calculator Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. H & r block free tax calculator   If you have a tax question, check the information available on IRS. H & r block free tax calculator gov or call 1-800-829-1040. H & r block free tax calculator We cannot answer tax questions sent to either of the above addresses. H & r block free tax calculator Prev  Up  Next   Home   More Online Publications
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The H & R Block Free Tax Calculator

H & r block free tax calculator 4. H & r block free tax calculator   Detailed Examples Table of Contents These examples use actual forms to help you prepare your income tax return. H & r block free tax calculator However, the information shown on the filled-in forms is not from any actual person or scenario. H & r block free tax calculator Example 1—Mortgage loan modification. H & r block free tax calculator    In 2007, Nancy Oak bought a main home for $435,000. H & r block free tax calculator Nancy took out a $420,000 mortgage loan to buy the home and made a down payment of $15,000. H & r block free tax calculator The loan was secured by the home. H & r block free tax calculator The mortgage loan was a recourse debt, meaning that Nancy was personally liable for the debt. H & r block free tax calculator In 2008, Nancy took out a second mortgage loan (also a recourse debt) in the amount of $30,000 that was used to substantially improve her kitchen. H & r block free tax calculator    In 2011, when the outstanding principal of the first and second mortgage loans was $440,000, Nancy refinanced the two recourse loans into one recourse loan in the amount of $475,000. H & r block free tax calculator The FMV of Nancy's home at the time of the refinancing was $500,000. H & r block free tax calculator Nancy used the additional $35,000 debt ($475,000 new mortgage loan minus $440,000 outstanding principal of Nancy's first and second mortgage loans immediately before the refinancing) to pay off personal credit cards and to pay college tuition for her son. H & r block free tax calculator After the refinancing, Nancy has qualified principal residence indebtedness in the amount of $440,000 because the refinanced debt is qualified principal residence indebtedness only to the extent the amount of debt is not more than the old mortgage principal just before the refinancing. H & r block free tax calculator   In 2013, Nancy was unable to make her mortgage loan payments. H & r block free tax calculator On August 31, 2013, when the outstanding balance of her refinanced mortgage loan was still $475,000 and the FMV of the property was $425,000, Nancy's bank agreed to a loan modification (a “workout”) that resulted in a $40,000 reduction in the principal balance of her loan. H & r block free tax calculator Nancy was neither insolvent nor in bankruptcy at the time of the loan modification. H & r block free tax calculator   Nancy received a 2013 Form 1099-C from her bank in January 2014 showing canceled debt of $40,000 in box 2. H & r block free tax calculator Identifiable event code "F" appears in box 6. H & r block free tax calculator This box shows the reason the creditor has filed Form 1099-C. H & r block free tax calculator To determine if she must include the canceled debt in her income, Nancy must determine whether she meets any of the exceptions or exclusions that apply to canceled debts. H & r block free tax calculator Nancy determines that the only exception or exclusion that applies to her is the qualified principal residence indebtedness exclusion. H & r block free tax calculator   Next, Nancy determines the amount, if any, of the $40,000 of canceled debt that was qualified principal residence indebtedness. H & r block free tax calculator Although Nancy has $440,000 of qualified principal residence indebtedness, part of her loan ($35,000) was not qualified principal residence indebtedness because it was used to pay off personal credit cards and college tuition for her son. H & r block free tax calculator Applying the ordering rule, the qualified principal residence indebtedness exclusion applies only to the extent the amount canceled is more than the amount of the debt (immediately before the cancellation) that is not qualified principal residence indebtedness. H & r block free tax calculator Thus, Nancy can exclude only $5,000 of the canceled debt as qualified principal residence indebtedness ($40,000 amount canceled minus $35,000 nonqualified debt). H & r block free tax calculator   Because Nancy does not meet any other exception or exclusion, she checks only the box on line 1e of Form 982 and enters $5,000 on line 2. H & r block free tax calculator Nancy must also enter $5,000 on line 10b and reduce the basis of her main home by the $5,000 she excluded from income, bringing the adjusted basis in her home to $460,000 ($435,000 purchase price plus $30,000 substantial improvement minus $5,000). H & r block free tax calculator Nancy must also include the $35,000 nonqualified debt portion in income on Form 1040, line 21. H & r block free tax calculator You can see Nancy's Form 1099-C and a portion of her Form 1040 below. H & r block free tax calculator Nancy's 2013 Form 1099-C, Cancellation of Debt This image is too large to be displayed in the current screen. H & r block free tax calculator Please click the link to view the image. H & r block free tax calculator Form 1099-C, Cancellation of Debt Nancy's 2013 Form 1040 This image is too large to be displayed in the current screen. H & r block free tax calculator Please click the link to view the image. H & r block free tax calculator Form 1040, U. H & r block free tax calculator S. H & r block free tax calculator Individual Income Tax Nancy's Form 982 This image is too large to be displayed in the current screen. H & r block free tax calculator Please click the link to view the image. H & r block free tax calculator Form 982 Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment)              Example 2—Mortgage loan foreclosure. H & r block free tax calculator    In 2005, John and Mary Elm bought a main home for $335,000. H & r block free tax calculator John and Mary took out a $320,000 mortgage loan to buy the home and made a down payment of $15,000. H & r block free tax calculator The loan was secured by the home and is a recourse debt, meaning John and Mary are personally liable for the debt. H & r block free tax calculator   John and Mary became unable to make their mortgage loan payments and on March 1, 2013, when the outstanding balance of the mortgage loan was $315,000 and the FMV of the property was $290,000, the bank foreclosed on the property and simultaneously canceled the remaining mortgage debt. H & r block free tax calculator Immediately before the foreclosure, John and Mary's only other assets and liabilities were a checking account with a balance of $6,000, retirement savings of $13,000, and credit card debt of $5,500. H & r block free tax calculator   John and Mary received a 2013 Form 1099-C showing canceled debt of $25,000 in box 2 ($315,000 outstanding balance minus $290,000 FMV) and an FMV of $290,000 in box 7. H & r block free tax calculator Identifiable event code "D" appears in box 6. H & r block free tax calculator This box shows the reason the creditor has filed Form 1099-C. H & r block free tax calculator In order to determine if John and Mary must include the canceled debt in income, they must first determine whether they meet any of the exceptions or exclusions that apply to canceled debts. H & r block free tax calculator In this example, John and Mary meet both the insolvency and qualified principal residence indebtedness exclusions. H & r block free tax calculator Their sample Form 1099-C is shown on this page. H & r block free tax calculator   John and Mary complete the insolvency worksheet and determine that they were insolvent immediately before the cancellation because at that time their liabilities exceeded the FMV of their assets by $11,500 ($320,500 total liabilities minus $309,000 FMV of total assets). H & r block free tax calculator However, because the entire debt canceled is qualified principal residence indebtedness, the insolvency exclusion only applies if John and Mary elect to apply the insolvency exclusion instead of the qualified principal residence exclusion. H & r block free tax calculator   John and Mary do not elect to apply the insolvency exclusion instead of the qualified principal residence exclusion because under the insolvency exclusion their exclusion would be limited to the amount by which they were insolvent ($11,500). H & r block free tax calculator Instead, John and Mary check box 1e of Form 982 to exclude the canceled debt under the qualified principal residence exclusion. H & r block free tax calculator Under the qualified principal residence exclusion, the amount that John and Mary can exclude is not limited because their qualified principal residence indebtedness is not more than $2 million and no portion of the loan was nonqualified debt. H & r block free tax calculator As a result, John and Mary enter the full $25,000 of canceled debt on line 2 of Form 982. H & r block free tax calculator Because John and Mary no longer own the home due to the foreclosure, John and Mary have no remaining basis in the home at the time of the debt cancellation. H & r block free tax calculator Thus, John and Mary leave line 10b of Form 982 blank. H & r block free tax calculator   John and Mary must also determine whether they have a gain or loss from the foreclosure. H & r block free tax calculator John and Mary complete Table 1-1 (shown below) and find that they have a $45,000 loss from the foreclosure. H & r block free tax calculator Because this loss relates to their home, it is a nondeductible loss. H & r block free tax calculator   John and Mary's Form 1099-C, Insolvency Worksheet, and Form 982 follow. H & r block free tax calculator John and Mary's 2013 Form 1099-C, Cancellation of Debt This image is too large to be displayed in the current screen. H & r block free tax calculator Please click the link to view the image. H & r block free tax calculator Form 1099-C, Cancellation of Debt Table 1-1. H & r block free tax calculator Worksheet for Foreclosures and Repossessions (for John and Mary Elm) Part 1. H & r block free tax calculator Complete Part 1 only if you were personally liable for the debt (even if none of the debt was canceled). H & r block free tax calculator Otherwise, go to Part 2. H & r block free tax calculator 1. H & r block free tax calculator Enter the amount of outstanding debt immediately before the transfer of property reduced by any amount for which you remain personally liable immediately after the transfer of property $315,000. H & r block free tax calculator 00 2. H & r block free tax calculator Enter the fair market value of the transferred property $290,000. H & r block free tax calculator 00 3. H & r block free tax calculator Ordinary income from the cancellation of debt upon foreclosure or repossession. H & r block free tax calculator * Subtract line 2 from line 1. H & r block free tax calculator If less than zero, enter zero. H & r block free tax calculator Next, go to Part 2 $ 25,000. H & r block free tax calculator 00 Part 2. H & r block free tax calculator Gain or loss from foreclosure or repossession. H & r block free tax calculator   4. H & r block free tax calculator Enter the smaller of line 1 or line 2. H & r block free tax calculator If you did not complete Part 1 (because you were not personally liable for the debt), enter the amount of outstanding debt immediately before the transfer of property $290,000. H & r block free tax calculator 00 5. H & r block free tax calculator Enter any proceeds you received from the foreclosure sale   6. H & r block free tax calculator Add line 4 and line 5 $290,000. H & r block free tax calculator 00 7. H & r block free tax calculator Enter the adjusted basis of the transferred property $335,000. H & r block free tax calculator 00 8. H & r block free tax calculator Gain or loss from foreclosure or repossession. H & r block free tax calculator Subtract line 7 from line 6 ($ 45,000. H & r block free tax calculator 00) * The income may not be taxable. H & r block free tax calculator See chapter 1 for more details. H & r block free tax calculator Insolvency Worksheet—John and Mary Elm Date debt was canceled (mm/dd/yy) 03/01/13 Part I. H & r block free tax calculator Total liabilities immediately before the cancellation (do not include the same liability in more than one category) Liabilities (debts) Amount Owed Immediately Before the Cancellation 1. H & r block free tax calculator Credit card debt $ 5,500 2. H & r block free tax calculator Mortgage(s) on real property (including first and second mortgages and home equity loans) (mortgage(s) can be on personal residence, any additional residence, or property held for investment or used in a trade or business) $ 315,000 3. H & r block free tax calculator Car and other vehicle loans $ 4. H & r block free tax calculator Medical bills owed $ 5. H & r block free tax calculator Student loans $ 6. H & r block free tax calculator Accrued or past-due mortgage interest $ 7. H & r block free tax calculator Accrued or past-due real estate taxes $ 8. H & r block free tax calculator Accrued or past-due utilities (water, gas, electric) $ 9. H & r block free tax calculator Accrued or past-due child care costs $ 10. H & r block free tax calculator Federal or state income taxes remaining due (for prior tax years) $ 11. H & r block free tax calculator Judgments $ 12. H & r block free tax calculator Business debts (including those owed as a sole proprietor or partner) $ 13. H & r block free tax calculator Margin debt on stocks and other debt to purchase or secured by investment assets other than real property $ 14. H & r block free tax calculator Other liabilities (debts) not included above $ 15. H & r block free tax calculator Total liabilities immediately before the cancellation. H & r block free tax calculator Add lines 1 through 14. H & r block free tax calculator $ 320,500 Part II. H & r block free tax calculator Fair market value (FMV) of assets owned immediately before the cancellation (do not include the FMV of the same asset in more than one category) Assets FMV Immediately Before  the Cancellation 16. H & r block free tax calculator Cash and bank account balances $ 6,000 17. H & r block free tax calculator Real property, including the value of land (can be main home, any additional home, or property held for investment or used in a trade or business) $ 290,000 18. H & r block free tax calculator Cars and other vehicles $ 19. H & r block free tax calculator Computers $ 20. H & r block free tax calculator Household goods and furnishings (for example, appliances, electronics, furniture, etc. H & r block free tax calculator ) $ 21. H & r block free tax calculator Tools $ 22. H & r block free tax calculator Jewelry $ 23. H & r block free tax calculator Clothing $ 24. H & r block free tax calculator Books $ 25. H & r block free tax calculator Stocks and bonds $ 26. H & r block free tax calculator Investments in coins, stamps, paintings, or other collectibles $ 27. H & r block free tax calculator Firearms, sports, photographic, and other hobby equipment $ 28. H & r block free tax calculator Interest in retirement accounts (IRA accounts, 401(k) accounts, and other retirement accounts) $ 13,000 29. H & r block free tax calculator Interest in a pension plan $ 30. H & r block free tax calculator Interest in education accounts $ 31. H & r block free tax calculator Cash value of life insurance $ 32. H & r block free tax calculator Security deposits with landlords, utilities, and others $ 33. H & r block free tax calculator Interests in partnerships $ 34. H & r block free tax calculator Value of investment in a business $ 35. H & r block free tax calculator Other investments (for example, annuity contracts, guaranteed investment contracts, mutual funds, commodity accounts, interests in hedge funds, and options) $ 36. H & r block free tax calculator Other assets not included above $ 37. H & r block free tax calculator FMV of total assets immediately before the cancellation. H & r block free tax calculator Add lines 16 through 36. H & r block free tax calculator $ 309,000 Part III. H & r block free tax calculator Insolvency 38. H & r block free tax calculator Amount of Insolvency. H & r block free tax calculator Subtract line 37 from line 15. H & r block free tax calculator If zero or less, you are not insolvent. H & r block free tax calculator $ 11,500 John and Mary's Form 982 This image is too large to be displayed in the current screen. H & r block free tax calculator Please click the link to view the image. H & r block free tax calculator Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment)          Example 3—Mortgage loan foreclosure with debt exceeding $2 million limit. H & r block free tax calculator    In 2011, Kathy and Frank Willow got married and entered into a contract with Hive Construction Corporation to build a house for $3,000,000 to be used as their main home. H & r block free tax calculator Kathy and Frank made a $400,000 down payment and took out a $2,600,000 mortgage to finance the remaining cost of the house. H & r block free tax calculator Kathy and Frank are personally liable for the mortgage loan, which is secured by the home. H & r block free tax calculator   In November 2013, when the outstanding principal balance on the mortgage loan was $2,500,000, the FMV of the property fell to $1,750,000 and Kathy and Frank abandoned the property by permanently moving out. H & r block free tax calculator The lender foreclosed on the property and, on December 5, 2013, sold the property to another buyer for $1,750,000. H & r block free tax calculator On December 26, 2013, the lender canceled the remaining debt. H & r block free tax calculator Kathy and Frank have no tax attributes other than basis of personal-use property. H & r block free tax calculator   The lender issued a 2013 Form 1099-C to Kathy and Frank showing canceled debt of $750,000 in box 2 (the remaining balance on the $2,500,000 mortgage debt after application of the foreclosure sale proceeds) and $1,750,000 in box 7 (FMV of the property). H & r block free tax calculator Identifiable event code "D" appears in box 6. H & r block free tax calculator This box shows the reason the creditor has filed Form 1099-C. H & r block free tax calculator Although Kathy and Frank abandoned the property, the lender did not need to also file a Form 1099-A because the lender canceled the debt in connection with the foreclosure in the same calendar year. H & r block free tax calculator Kathy and Frank are filing a joint return for 2013. H & r block free tax calculator   Because the foreclosure occurred prior to the debt cancellation, Kathy and Frank first calculate their gain or loss from the foreclosure using Table 1-1. H & r block free tax calculator Because Kathy and Frank remained personally liable for the $750,000 debt remaining after the foreclosure ($2,500,000 outstanding debt immediately before the foreclosure minus $1,750,000 satisfied through the sale of the home), Kathy and Frank enter $1,750,000 on line 1 of Table 1-1 ($2,500,000 outstanding debt immediately before the foreclosure minus the $750,000 for which they remained liable). H & r block free tax calculator Completing Table 1-1, Kathy and Frank find that they have no ordinary income from the cancellation of debt upon foreclosure and that they have a $1,250,000 loss. H & r block free tax calculator Because this loss relates to their home, it is a nondeductible loss. H & r block free tax calculator   Because the lender later canceled the remaining amount of the debt, Kathy and Frank must also determine whether that canceled debt is taxable. H & r block free tax calculator Immediately before the cancellation, Kathy and Frank had $15,000 in a savings account, household furnishings with an FMV of $17,000, a car with an FMV of $10,000, and $18,000 in credit card debt. H & r block free tax calculator Kathy and Frank also had the $750,000 remaining balance on the mortgage loan at that time. H & r block free tax calculator The household furnishings originally cost $30,000. H & r block free tax calculator The car had been fully paid off (so there was no related outstanding debt) and was originally purchased for $16,000. H & r block free tax calculator Kathy and Frank had no adjustments to the cost basis of the car. H & r block free tax calculator Kathy and Frank had no other assets or liabilities at the time of the cancellation. H & r block free tax calculator Kathy and Frank complete the insolvency worksheet to calculate that they were insolvent to the extent of $726,000 immediately before the cancellation ($768,000 of total liabilities minus $42,000 FMV of total assets). H & r block free tax calculator   At the beginning of 2014, Kathy and Frank had $9,000 in their savings account and $15,000 in credit card debt. H & r block free tax calculator Kathy and Frank also owned the same car at that time (still with an FMV of $10,000 and basis of $16,000) and the same household furnishings (still with an FMV of $17,000 and a basis of $30,000). H & r block free tax calculator Kathy and Frank had no other assets or liabilities at that time. H & r block free tax calculator Kathy and Frank no longer own the home because the lender foreclosed on it in 2013. H & r block free tax calculator   Because the canceled debt is qualified principal residence indebtedness, the insolvency exclusion does not apply unless Kathy and Frank elect to apply the insolvency exclusion instead of the qualified principal residence indebtedness exclusion. H & r block free tax calculator The maximum amount that Kathy and Frank can treat as qualified principal residence indebtedness is $2,000,000. H & r block free tax calculator The remaining $500,000 ($2,500,000 outstanding mortgage loan minus $2,000,000 limit on qualified principal residence indebtedness) is not qualified principal residence indebtedness. H & r block free tax calculator Because only a part of the loan is qualified principal residence indebtedness, Kathy and Frank must apply the ordering rule to the canceled debt. H & r block free tax calculator Under the ordering rule, the qualified principal residence indebtedness exclusion applies only to the extent that the amount canceled ($750,000) exceeds the amount of the loan (immediately before the cancellation) that is not qualified principal residence indebtedness ($500,000). H & r block free tax calculator This means that Kathy and Frank can only exclude $250,000 ($750,000 amount canceled minus $500,000 nonqualified debt) under the qualified principal residence indebtedness exclusion. H & r block free tax calculator   Kathy and Frank do not elect to have the insolvency exclusion apply instead of the qualified principal residence exclusion. H & r block free tax calculator Nonetheless, they can still apply the insolvency exclusion to the $500,000 nonqualified debt because it is not qualified principal residence indebtedness. H & r block free tax calculator Kathy and Frank can exclude the remaining $500,000 canceled debt under the insolvency exclusion because they were insolvent immediately before the cancellation to the extent of $726,000. H & r block free tax calculator Thus, Kathy and Frank check the boxes on lines 1b and 1e of Form 982 and enter $750,000 on line 2 ($250,000 excluded under the qualified principal residence indebtedness exclusion plus $500,000 excluded under the insolvency exclusion). H & r block free tax calculator   Next, Kathy and Frank reduce their tax attributes using Part II of Form 982. H & r block free tax calculator Because Kathy and Frank no longer own the home due to the foreclosure, Kathy and Frank have no remaining basis in the home at the time of the debt cancellation. H & r block free tax calculator Thus, Kathy and Frank leave line 10b of Form 982 blank. H & r block free tax calculator However, Kathy and Frank are also excluding nonqualified debt under the insolvency exclusion. H & r block free tax calculator As a result, Kathy and Frank must reduce the basis of property they own based on the amount of canceled debt they are excluding from income under the insolvency rules. H & r block free tax calculator Because Kathy and Frank have no tax attributes other than basis of personal-use property to reduce, Kathy and Frank figure the amount they must include on line 10a of Form 982 by taking the smallest of: The $46,000 bases of their personal-use property held at the beginning of 2014 ($16,000 basis in the car plus $30,000 basis in household furnishings), The $500,000 of the nonbusiness debt (other than qualified principal residence indebtedness) that they are excluding from income on line 2 of Form 982, or The $43,000 excess of the total bases of the property and the amount of money they held immediately after the cancellation over their total liabilities immediately after the cancellation ($15,000 in savings account plus $30,000 basis in household furnishings plus $16,000 adjusted basis in car minus $18,000 credit card debt). H & r block free tax calculator Kathy and Frank enter $43,000 on Form 982, line 10a and reduce their bases in the car and the household furnishings in proportion to the total adjusted bases in all their property. H & r block free tax calculator Kathy and Frank reduce the basis in the car by $14,956. H & r block free tax calculator 52 ($43,000 x $16,000/$46,000). H & r block free tax calculator And they reduce the basis in the household furnishings by $28,043. H & r block free tax calculator 48 ($43,000 x $30,000/$46,000). H & r block free tax calculator   Following are Kathy and Frank's sample forms and worksheets. H & r block free tax calculator Frank and Kathy's 2013 Form 1099-C, Cancellation of Debt This image is too large to be displayed in the current screen. H & r block free tax calculator Please click the link to view the image. H & r block free tax calculator Form 1099-C, Cancellation of Debt Table 1-1. H & r block free tax calculator Worksheet for Foreclosures and Repossessions (for Frank and Kathy Willow) Part 1. H & r block free tax calculator Complete Part 1 only if you were personally liable for the debt (even if none of the debt was canceled). H & r block free tax calculator Otherwise, go to Part 2. H & r block free tax calculator 1. H & r block free tax calculator Enter the amount of outstanding debt immediately before the transfer of property reduced by any amount for which you remain personally liable immediately after the transfer of property $1,750,000. H & r block free tax calculator 00 2. H & r block free tax calculator Enter the fair market value of the transferred property $1,750,000. H & r block free tax calculator 00 3. H & r block free tax calculator Ordinary income from the cancellation of debt upon foreclosure or repossession. H & r block free tax calculator * Subtract line 2 from line 1. H & r block free tax calculator If less than zero, enter zero. H & r block free tax calculator Next, go to Part 2 $0. H & r block free tax calculator 00 Part 2. H & r block free tax calculator Gain or loss from foreclosure or repossession. H & r block free tax calculator   4. H & r block free tax calculator Enter the smaller of line 1 or line 2. H & r block free tax calculator If you did not complete Part 1 (because you were not personally liable for the debt), enter the amount of outstanding debt immediately before the transfer of property. H & r block free tax calculator $1,750,000. H & r block free tax calculator 00 5. H & r block free tax calculator Enter any proceeds you received from the foreclosure sale   6. H & r block free tax calculator Add line 4 and line 5 $1,750,000. H & r block free tax calculator 00 7. H & r block free tax calculator Enter the adjusted basis of the transferred property $3,000,000. H & r block free tax calculator 00 8. H & r block free tax calculator Gain or loss from foreclosure or repossession. H & r block free tax calculator Subtract line 7 from line 6 ($1,250,000. H & r block free tax calculator 00) * The income may not be taxable. H & r block free tax calculator See chapter 1 for more details. H & r block free tax calculator    Insolvency Worksheet—Frank and Kathy Willow Date debt was canceled (mm/dd/yy) 12/26/13 Part I. H & r block free tax calculator Total liabilities immediately before the cancellation (do not include the same liability in more than one category) Liabilities (debts) Amount Owed Immediately Before the Cancellation 1. H & r block free tax calculator Credit card debt $ 18,000 2. H & r block free tax calculator Mortgage(s) on real property (including first and second mortgages and home equity loans) (mortgage(s) can be on personal residence, any additional residence, or property held for investment or used in a trade or business) $ 750,000 3. H & r block free tax calculator Car and other vehicle loans $ 4. H & r block free tax calculator Medical bills owed $ 5. H & r block free tax calculator Student loans $ 6. H & r block free tax calculator Accrued or past-due mortgage interest $ 7. H & r block free tax calculator Accrued or past-due real estate taxes $ 8. H & r block free tax calculator Accrued or past-due utilities (water, gas, electric) $ 9. H & r block free tax calculator Accrued or past-due child care costs $ 10. H & r block free tax calculator Federal or state income taxes remaining due (for prior tax years) $ 11. H & r block free tax calculator Judgments $ 12. H & r block free tax calculator Business debts (including those owed as a sole proprietor or partner) $ 13. H & r block free tax calculator Margin debt on stocks and other debt to purchase or secured by investment assets other than real property $ 14. H & r block free tax calculator Other liabilities (debts) not included above $ 15. H & r block free tax calculator Total liabilities immediately before the cancellation. H & r block free tax calculator Add lines 1 through 14. H & r block free tax calculator $ 768,000 Part II. H & r block free tax calculator Fair market value (FMV) of assets owned immediately before the cancellation (do not include the FMV of the same asset in more than one category) Assets FMV Immediately Before  the Cancellation 16. H & r block free tax calculator Cash and bank account balances $ 15,000 17. H & r block free tax calculator Real property, including the value of land (can be main home, any additional home, or property held for investment or used in a trade or business) $ 18. H & r block free tax calculator Cars and other vehicles $ 10,000 19. H & r block free tax calculator Computers $ 20. H & r block free tax calculator Household goods and furnishings (for example, appliances, electronics, furniture, etc. H & r block free tax calculator ) $ 17,000 21. H & r block free tax calculator Tools $ 22. H & r block free tax calculator Jewelry $ 23. H & r block free tax calculator Clothing $ 24. H & r block free tax calculator Books $ 25. H & r block free tax calculator Stocks and bonds $ 26. H & r block free tax calculator Investments in coins, stamps, paintings, or other collectibles $ 27. H & r block free tax calculator Firearms, sports, photographic, and other hobby equipment $ 28. H & r block free tax calculator Interest in retirement accounts (IRA accounts, 401(k) accounts, and other retirement accounts) $ 29. H & r block free tax calculator Interest in a pension plan $ 30. H & r block free tax calculator Interest in education accounts $ 31. H & r block free tax calculator Cash value of life insurance $ 32. H & r block free tax calculator Security deposits with landlords, utilities, and others $ 33. H & r block free tax calculator Interests in partnerships $ 34. H & r block free tax calculator Value of investment in a business $ 35. H & r block free tax calculator Other investments (for example, annuity contracts, guaranteed investment contracts, mutual funds, commodity accounts, interests in hedge funds, and options) $ 36. H & r block free tax calculator Other assets not included above $ 37. H & r block free tax calculator FMV of total assets immediately before the cancellation. H & r block free tax calculator Add lines 16 through 36. H & r block free tax calculator $ 42,000 Part III. H & r block free tax calculator Insolvency 38. H & r block free tax calculator Amount of Insolvency. H & r block free tax calculator Subtract line 37 from line 15. H & r block free tax calculator If zero or less, you are not insolvent. H & r block free tax calculator $ 726,000    Frank and Kathy's Form 982 This image is too large to be displayed in the current screen. H & r block free tax calculator Please click the link to view the image. H & r block free tax calculator Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) Prev  Up  Next   Home   More Online Publications