Discussion:982 and bankruptcy
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(Difference between revisions)
| Revision as of 22:18, 12 October 2009 Szptax (Talk | contribs) (ahhh - thank you) ← Previous diff |
Revision as of 22:55, 12 October 2009 Michaelstar (Talk | contribs) (R2 deserves all) Next diff → |
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| + | {{ForumReplyPost|UserID=Michaelstar|Date=12 October 2009|Text=R2 deserves all the credit on this one}} | ||
Revision as of 22:55, 12 October 2009
Discussion Forum Index --> Basic Tax Questions --> 982 and bankruptcy
Discussion Forum Index --> Tax Questions --> 982 and bankruptcy
| 12 October 2009 | |
| I'm feeling like a complete numpty. I have a client who filed bankruptcy. I am doing the "post" bankruptcy period return. She has an NOL that is carried forward from 2007. This should be eliminated with the bankruptcy filing (form 982). Should I be filing this with the 1040 I am preparing or should it have been filed by the trustee with the 1041? My client and the attorney are making me feel like I am speaking a foreign language. Am I correct? Should I do the 982 with the 1040 I am preparing & reduce the tax attributes accordingly? | |
| 12 October 2009 | |
| All of my comments are based on the assumption that the client filed bk in 2008 and was discharged in 2008.
The 2007 NOL should be used to reduce the tax for the 2008 tax year, then the unused balance of the NOL is subject to attribute reduction on Form 982. The trustee will file Form 1041 to report the income to which the trustee is entitled under bk law. As a practical matter, because of Sec. 522 exemptions, most bankruptcies are "no-asset" cases and the trustee has nothing to report. | |
| 12 October 2009 | |
| bankruptcy was filed in 2008 and discharged in 2009. Does that change anything in your answer? | |
| 12 October 2009 | |
| Yes, the 2007 NOL is used to reduce the tax for 2008 and 2009, then the attribute reduction is applied on the unused balance of the NOL. | |
| 12 October 2009 | |
| so the 982 attribution reduction applied to the 2009 taxes? I thought it would be 2008 since the bankruptcy was filed 10-6-08. I guess I misunderstood that. What you are saying is that I need to do nothing different with the 2008. Sorry, but the more I think this through, the more confused I make myself! | |
Michaelstar (talk|edits) said: | 12 October 2009 |
| Correct - what R2 is saying is that you will apply the NOL to the 2008 return. If there is still unused NOL that is a carry forward to 2009, you will again utilize the NOL against 2009 income. Any remaining NOL will then be an o/s tax attribute that will be taken to Form 982 in 2009 and be subject to reduction accordingly. | |
| 12 October 2009 | |
| Correct. The net effect of the attribute reduction rules is that the attribute reduction occurs on January 1, 2010, but is reported on the 2009 Form 982. | |
Michaelstar (talk|edits) said: | 12 October 2009 |
| R2 deserves all the credit on this one | |
