Go Back To Search Results Question How to file 982 part II reduction of tax attributes for 2nd mortgage? I received a 1099c for 2nd mortgage ($37,000), which i included in bankruptcy. I still live in the home and am current on the 1st mortgage ($140,000). The fair market value on 1099c is $165,000. I am not sure how to fill out part II reduction of tax attributes form 982. By Posted on 01/27/11 Total Answers 1 Answers- since it was bankruptcy, you follow the form. See publication 4681. Here's the problem, some or all of the cancelled debt may be applied to your cost basis in your home. If the market recovers and you sell, this will be "ordinary income" and taxable when you sell. The $250K exclusion will not apply. Answer by : the tax lady On Date 2011-01-27 09:12:16   Go Back To Search Results