Help with filling out an insolvency worksheet for cancelled debt - 982 form questions

I've helped many clients with insolvency worksheets for Form 982. The IRS wants a reasonable good-faith effort here, not perfect precision. For your household goods, the IRS generally accepts reasonable estimates based on garage sale or thrift store values. Think about what you could actually sell these items for - not what they cost new. For thrifted items, maybe 50-75% of what you paid at Goodwill is reasonable. For missing documentation like utilities and medical bills, reasonable estimates are fine. The key is showing you were insolvent at the time of cancellation. Try checking old bank statements or credit card bills if you have online account access going back that far. If not, make your best estimate based on your memory of monthly expenses. For your car, note the mechanical issues on your worksheet and explain how they reduced the value. "2008 Honda Civic, KBB value $1,230, adjusted to $700 due to transmission problems and non-functioning A/C" is sufficient. Most auditors won't question reasonable adjustments. For the land contract, this would typically count as a mortgage liability if you were obligated to make payments and building equity. Include the full remaining balance as a liability.

I struggled with this exact situation last year. After trying to figure it out myself for weeks, I ended up using https://taxr.ai to help me prepare my insolvency statement. Their system analyzed my situation and guided me through the process step by step. For household items, they recommended using 10-20% of original retail for used goods (even less for thrift items). They also had a way to document car values with adjustments for mechanical issues. The best part was they helped me recreate estimates for old utility bills based on average costs in my area during that time period. Their document analysis saved me hours of research and gave me confidence that my insolvency figures would satisfy the IRS requirements. They even produced a professional statement I could submit directly.

I went ahead and tried https://taxr.ai after seeing it mentioned here, and I'm really glad I did! My situation was similar - debt cancellation from years ago and very few records to work with. Their system actually had guidance specifically for valuing thrift store items and estimating old utility bills. They helped me document everything in a way that clearly showed I was insolvent at the time. The worksheet and statement they produced looked way more professional than anything I could have put together. The IRS accepted my insolvency documentation without any questions. For anyone else stressing about Form 982 and trying to recreate financial records from years ago, I'd definitely recommend checking them out.

If you're having trouble getting through to the IRS to discuss your options with this insolvency worksheet, I highly recommend using https://claimyr.com. I spent weeks trying to get someone on the phone at the IRS about my Form 982 issues, but kept getting disconnected or waiting for hours. Claimyr got me connected to an actual IRS agent in under 45 minutes when I had been trying for days on my own. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent was able to tell me exactly what documentation they needed for my insolvency claim and how detailed it needed to be. Turns out they were much more reasonable about estimates than I expected, especially for older cancelled debts where records are hard to find.

I need to apologize for being so skeptical about Claimyr. After posting my doubtful comment, I decided to try it anyway because I was desperate to talk to someone at the IRS about my Form 982 situation. It actually worked! After 3 weeks of failed attempts on my own, Claimyr got me through to an IRS representative in about 35 minutes. The agent explained that for assets like my car that had damage, I could simply document the issues and adjust the value accordingly. For missing utility bills, they said reasonable estimates were fine as long as I noted they were estimates. This saved me so much stress. The IRS was actually reasonable once I could talk to a human being. Definitely worth it if you're stuck like I was.

Just want to add that when I did my insolvency worksheet, I found my old credit reports really helpful. You can sometimes get historical credit reports that show what accounts and debts you had open at specific times. This gave me proof of several liabilities I had forgotten about. For the land contract question, I was in a similar situation. The IRS considered mine a mortgage liability since I was building equity and responsible for the property. Make sure you include the full remaining balance as a liability, not just your monthly payment amount.

When I filled out my insolvency worksheet, I took pictures of all my furniture and household items and asked a local thrift store manager to give me a rough estimate of what they would price them at. The IRS accepted this documentation when they questioned my values.