982 Reduction of Tax Attributes Due to Discharge of Indebten

3
TLS, have you
transmitted all R
text files for this
cycle update?

Date

Form

982

(Rev. January 2006)
Department of the Treasury
Internal Revenue Service

I.R.S. SPECIFICATIONS

TO BE REMOVED BEFORE PRINTING

INSTRUCTIONS TO PRINTERS
FORM 982, PAGE 1 of 4
MARGINS: TOP 13 mm (1⁄2 "), CENTER SIDES.
PRINTS; HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20
INK: BLACK
1
FLAT SIZE: 216 mm (8 ⁄2 ") X 279 mm (11")
PERFORATE: (NONE)
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

Action

Revised proofs
requested

Reduction of Tax Attributes Due to Discharge of
Indebtedness (and Section 1082 Basis Adjustment)
䊳

1
a
b
c
d
e
2
3

Signature

O.K. to print

OMB No. 1545-0046
Attachment
Sequence No.

Attach this form to your income tax return.

Name shown on return

Part I

Date

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 certain indebtedness of a qualified individual by reason of Hurricane Katrina
2
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 for sale to
customers in the ordinary course of a trade or business, as if it were depreciable property?

Part II

Yes

No

Reduction of Tax Attributes. You must attach a description of any transactions resulting in the reduction in basis under section
1017. See Regulations sections 1.1017-1 and 1.1017-1T 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
5 That you elect under section 108(b)(5) to apply first to reduce the basis (under section 1017) of
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
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
9 Applied to reduce any net capital loss for the tax year of the discharge including any capital loss
carryovers to the tax year of the discharge
10 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
11 For a discharge of qualified farm indebtedness, applied to reduce the basis of:
a Depreciable property used or held for use in a trade or business, or for the production of income, if
not reduced on line 5

4
5
6
7
8
9
10

11a

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

11b

c 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

94

Identifying number

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
for the tax year beginning
, and ending
.
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 3 of this form.

Cat. No. 17066E

Form

982

(Rev. 1-2006)

3
I.R.S. SPECIFICATIONS

TO BE REMOVED BEFORE PRINTING

INSTRUCTIONS TO PRINTERS
FORM 982, PAGE 2 of 4
MARGINS: TOP 13 mm (1⁄2 "), CENTER SIDES.
PRINTS; HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20
INK: BLACK
1
FLAT SIZE: 216 mm (8 ⁄2 ") X 279 mm (11")
PERFORATE: (NONE)
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

Page

Form 982 (Rev. 1-2006)

General Instructions
Section references are to the Internal Revenue Code unless
otherwise noted.

Purpose of Form
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 may exclude the amount of discharged indebtedness
from your gross income. Taxpayers who exclude discharge of
indebtedness income from gross income generally, must
reduce certain tax attributes either dollar for dollar or 33 cents
per dollar (see below).
Use Part I of Form 982 to indicate why any amount received
from the discharge of indebtedness should be excluded from
gross income.
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.
● Any net operating loss (NOL) for the tax year of the
discharge (and any NOL carryover to that year) (dollar for
dollar);
● Any general business credit carryover to or from the tax
year of the discharge (33 cents per dollar);
● Any minimum tax credit as of the beginning of the tax year
immediately after the tax year of the discharge (33 cents per
dollar);
● Any net capital loss for the tax year of the discharge (and
any capital loss carryover to that tax year) (dollar for dollar);
● Basis of property (dollar for dollar);
● Any passive activity loss (dollar for dollar) and credit (33
cents per dollar) carryovers from the tax year of the discharge;
and
● Any foreign tax credit carryover to or from the tax year of
the discharge (33 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.

Definitions
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.
The term discharge of indebtedness conveys forgiveness of,
or release from, an obligation to repay.
You are insolvent to the extent your liabilities exceed the fair
market value (FMV) of your assets immediately before the
discharge.
For details, get Pub. 908, Bankruptcy Tax Guide.

When to File
File Form 982 with your timely filed federal income tax return
(including extensions) in 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 may be revoked only with the consent
of the IRS.
If you timely filed your tax return without making the
election, you can still make the election by filing an amended
return within 6 months of the due date of the return (excluding

2

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
Lines 1a through 1c and 1e. If you check any of these boxes,
you may 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. For lines 1a,
1b, and 1e only, if after reducing the tax attributes there
remains a balance of the debt discharge, the excess is
permanently excluded from your gross income. You must
attach a statement describing the transactions that resulted in
the reduction in basis 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 to reduce your attributes. See
section 1017(b)(2) and (c) for limitations of reductions in basis
on line 10.
The exclusion relating to insolvency does not apply to a
discharge that occurs in a title 11 case. Also, the exclusions
relating to qualified farm indebtedness and qualified real
property business indebtedness do not apply to a discharge
that occurs in a title 11 case or to the extent the taxpayer is
insolvent.
Line 1c. 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 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. Also, a qualified person 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 1e. Gross income of a qualified individual does not
include any amount which would otherwise be includible in
gross income because of a discharge (in whole or in part) of
nonbusiness debt, by an applicable entity.This provision only
applies to discharges made after August 24, 2005, and before
January 1, 2007. However, any amount that you excluded
from gross income must reduce certain tax attributes as
explained under Purpose of Form.
A qualified individual, for purposes of this relief, is a natural
person whose principal place of abode on August 25, 2005,
was located: (1) in the core disaster area or (2) in the Hurricane
Katrina disaster area (but outside the core disaster area) and
that person suffered an economic loss by reason of Hurricane
Katrina. See Publication 4492, Information for Taxpayers
Affected by Hurricanes Katrina, Rita, and Wilma, for details
about the Hurricane Katrina disaster area.

3
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 982, PAGE 3 of 4 (PAGE 4 IS BLANK)
MARGINS: TOP 13 mm (1⁄2 "), CENTER SIDES.
PRINTS: HEAD to HEAD
PAPER: WHITE WRITING, SUB. 20. INK: BLACK
FLAT SIZE: 216 mm (81⁄2 ") x 279 mm (11")
PERFORATE: (NONE)
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

Page

Form 982 (Rev. 1-2006)

A nonbusiness debt is any indebtedness other than
indebtedness incurred in connection with a trade or business.
This allowed relief does not apply to any indebtedness
secured by real property located outside the Hurricane Katrina
disaster area.
An applicable entity means any executive, judicial, or
legislative agency as defined in 31 USC 3701(a)(4), and an
applicable financial entity.
An applicable financial entity means:
1. Any financial institution described in section 581 or 591(a)
and any credit union.
2. The Federal Deposit Insurance Corporation, the Resolution
Trust Corporation, the National Credit Union
Administration, and any other Federal executive agency
(as defined in section 6050M), and any successor or
subunit of these organizations.
3. Any other corporation which is a direct or indirect
subsidiary of an entity referred to in item 1, above, but
only if, by virtue of being affiliated with that entity, the
other corporation is subject to supervision and
examination by a Federal or State agency (which regulates
entities referred to in item 1, above).
4. Any organization for which a significant portion of their
trade or business is lending money.
This exclusion does not apply to discharges that occur in a
title 11 case, discharges due to insolvency, discharges of
qualified farm indebtedness, or discharges of qualified real
property business indebtedness.
Note. An entity that is required to file Form 1099-C,
Cancellation of Debt, is an applicable entity.
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.
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.
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 2. Enter the total amount excluded from your gross
income due to discharge of indebtness under section 108. If
you checked line 1a, 1b, 1c, and/or 1e, this amount will not

3

necessarily equal the total reductions on lines 5 through 13
because the debt discharge amount may exceed the total tax
attributes.
See section 382(l)(5) for a special rule regarding a
reduction of a corporation’s tax attributes after certain
ownership changes.
Line 3. You may 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
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 33 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 10. In the case of a title 11 case or insolvency (except
when an election under section 108(b)(5) is made), 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.

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 corporation’s property.
Paperwork Reduction Act Notice. We ask for the
information on this form to carry out the Internal Revenue
laws of the United States. You are required to give us the
information. We need it to ensure that you are complying
with these laws and to allow us to figure and collect the right
amount of tax.
You are not required to provide the information requested
on a form that is subject to the Paperwork Reduction Act
unless the form displays a valid OMB control number. Books
or records relating to a form or its instructions must be
retained as long as their contents may become material in
the administration of any Internal Revenue law. Generally, tax
returns and return information are confidential, as required by
section 6103.
The time needed to complete and file this form will vary
depending on individual circumstances. The estimated
burden 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., 17 min.; Preparing and sending the form
to the IRS, 2 hr., 28 min.
If you have comments concerning the accuracy of these
time estimates or suggestions for making this form simpler,
we would be happy to hear from you. See the instructions for
the tax return with which this form is filed.

Printed on recycled paper