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Screen 982S - Reduction of Tax Attributes - Discharge of Indebtedness (1120)

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General Information

Date cancellation of debt income realized and excluded from income
Enter the date the cancellation of debt income was realized and excluded from gross income under IRC section 108(a)(1)(A) for the tax year. the application uses this date to determine the amount of cancellation of debt income allocated to the shareholders if the S Corporation made a terminating election under IRC Section 1377(a)(2) during the tax year.

Reduction of Tax Attributes

Display available carryover
Enter
X
 in this field to display the amount of deemed net operating loss as of the last time the return was printed or previewed.
If the data within the return is changed after the deemed net operating loss is displayed, print preview the return and enter
X
 again.
Deemed net operating loss
Any shareholder loss or deduction that is disallowed for the taxable year of the discharge due to basis limitations is treated as a net operating loss of the S Corporation (deemed NOL). The deemed net operating loss is reduced by one dollar for each dollar of excluded canceled debt.
If the S Corporation has any excess deemed NOL after reduction, the application prints the Shareholder's Allocation of Excess Losses Per IRC 1.108-7(d)(2) Worksheet and allocate the excess proportionately to the shareholders.
Basis of nondepreciable and depreciable property / Qualified farm indebtedness, applied to reduce the basis of: Depreciable property, Land, Other Property
If the canceled debt is excluded because of both the insolvency exclusion and the exclusion for qualified farm indebtedness, you need to first reduce the tax attributes by the excluded amount due to insolvency. After that, you can then apply the exclusion for canceled qualified farm indebtedness.
Use these fields to report the excluded amount as applied to qualified farm indebtedness. 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 reduce the basis of the qualified asset in the asset module in the following tax year.

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