1120-US: Completing Screen 982 when there is qualified farm indebtedness (FAQ)

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Question

How do I complete Screen 982 when there is qualified farm indebtedness?

Answer

If canceled debt was excluded from income under both the insolvency exclusion and the exclusion for qualified farm indebtedness, the tax attributes must be reduced by the amount excluded under the insolvency exclusion before applying the exclusion for canceled qualified farm indebtedness. To report the excluded amount as applied to qualified farm indebtedness, enter the excluded amount in the applicable fields in Screen 982 or 982S (as applicable). The following qualified farm indebtedness fields are available.

If electing to reduce the basis of qualified property, do so in the following order.

  1. Depreciable property
  2. Land used or held in the taxpayer's farming business
  3. Other qualified property

Note: You need to manually adjust the basis by the first day of the following tax year in which the tax attribute was reduced for assets entered in the asset module.

Related topic: 1120-US: Form 982 - Reduction of Tax Attributes Due to Discharge of Indebtedness FAQs

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