California mortgage debt forgiveness - Spidell

California mortgage debt forgiveness

Log in to Post

Message Board California mortgage debt forgiveness

  • This topic has 1 reply, 2 voices, and was last updated 8 months ago by Diane White.
Viewing 1 reply thread
  • Author
    • #275474

      I’m getting more confused, the more I research. Please help:

      Bankruptcy filed and discharged in 2018. Includes forgiveness of an equity line of $136,000. Received a 1099C in 2019 for that amount.

      Lacerte – I entered it as debt forgiveness income, with the qualified principal residence exclusion. Completed Form 982 with Line 1E checked – discharge of qualified principal residence indebtedness.

      The 1040 is calculating correctly – total amount is excluded.

      But – Lacerte is adding back the $136,000 on the CA.  Lacerte says it’s correct. I think it should be excluded from CA oncome, since it was due to bankruptcy.

      Maybe I’m wrong? I’m getting more confused the more I read.

      Thank you in advance for you help.

    • #275609
      Diane White

      If on the Form 982 input you put discharge is due to insolvency and not enter the $136,000 as qualified principal residence exclusion it will take care of the CA problem. Do not enter the reduction of basis on the Form 982 input either. That is only for the residence exclusion. You should attach a copy of the federal Form 982 to the CA return.

Viewing 1 reply thread