Insolvency Worksheet | The Alt Key

You do not include canceled debt in your income to the extent you are insolvent immediately before the cancellation. Insolvent immediately before the cancellation means: your liabilities exceed the FMV of your assets the day before the cancellation.

Name of Creditor:

Amount of Canceled Debt:

Date Debt was Canceled (mm/dd/yy):

IMPORTANT ADVICE: Keeping your Records for this worksheet could prove to be important. Print out & include any proof for the FMV of your assets (what you use to determine FMV) and the balances of your liabilities (Examples include: bank statements, online values, appraisals, balance sheets, etc.). You never know when the IRS is going to ask you to PROVE IT!!!

Part I: Total Liabilities the Day Before the Cancellation

Do not include the same liability in more than one category

1. Credit Card Debt

2. (Mortgages(s) on real property (including first & second mortgages and home equity loans)
mortgages(s) can be on personal residence, additional residence, or property held for investment or used in a trade or business

3. Car and Other Vehicle Loans

4. Medical Bills

5. Student Loans

6. Accrued or Past-Due Mortgage Interest

7. Accrued or Past-Due Real Estate Taxes

8. Accrued or Past-Due Utilities (Water, Gas, Electric)

9. Accrued or Past-Due Child Care Costs

10. Federal or State Income Taxes Remaining Due (for Prior Tax Years)

11. Loans from 401(k) Accounts, Interest in Pension Plan, or Other Retirement Accounts

12. Loans Against Life Insurance Policies

13. Judgments

14. Business Debts (including those owed as a sole proprietor or partner)

15. Margin debt on Stocks and Other Debt to Purchase or Secured by Investment Asset
other than real property

16. Other Liabilities (Debts) - Not Included Above

17. Total Liabilities - Immediately Before the Cancellation.
Adds lines 1 through 16.

Part II. Fair Market Value (FMV) of Assets Owned the Day Before the Cancellation

Assets include everything you own. Do not include the FMV of the same asset in more than one category

18. Cash and Bank Account Balances

19. Residences (Including the Value of Land)
can be personal residence, additional residence, or property held for investment or used in a trade or business

20. Cars and Other Vehicles

21. Computers

22. Household Goods and Furnishings (Example: Appliances, Electronics, Furniture, etc.)

23. Tools

24. Jewelry

25. Clothing

26. Books

27. Stocks and Bonds

28. Investments in Coins, Stamps, Paintings, or Other Collectibles

29. Firearms, Sports, Photographic, and Other Hobby Equipment

30. Interest in Retirement Accounts (IRA, 401(k), and Other Retirement Accounts)

31. Interest in a Pension Plan

32. Interest in Education Accounts

33. Cash Value of Life Insurance

34. Security Deposits with Landlords, Utilities, and Others

35. Interest in Partnerships

36. Value of Investment in a Business

37. Other Investments (Annuity Contracts, Guaranteed Investment Contracts, Mutual Funds Commodity Accounts, Interest in Hedge Funds, and Options)

38. Other Assets - Not Included Above

39. FMV of Total Assets - Immediately Before the Cancellation.
Adds lines 18 through 38.

Insolvency

40. Amount of Insolvency. Subtracts line 39 from line 17. If zero or less, you are not insolvent.