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Insolvency Worksheet  Form

Insolvency Worksheet Form

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how do you determine whether someone is solvent or not IRS has an insolvency worksheet in IRS publication 4681 that you can use to help you determine whether you were solvent or not at the time of the debt cancellation I have created a Google Sheets file of the insolvency worksheet that you can use let's go through an example James made a deal with his credit card company to pay 2,000 on his 7,000 MasterCard credit card balance and the company agreed to take it as a payment in form he received a form 1099c from his credit card company reporting 5,000 in box two before the cancellation of debt is considered income James would have to see whether he was solvent immediately before the debt was cancelled he has to check what were his assets and liabilities right before the debt was cancelled I have a simplified version of the IRS worksheet here let's put in some numbers for the assets and liabilities in our case James had 65,500 more in assets than liabilities in November of 2023 therefore

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