Debt Cancellation for Massachusetts State Tax Filing "?"

[mappy0ne]

Hello!  I hope that your day is going well.

I have a Massachusetts State tax filing question that I was unable to get a straight answer from speaking to the Massachusetts Department of Revenue.

2019 Form 1099C (debt cancellation) in the amount of $26,031.40 discharged no withholding in a bankruptcy court proceeding (Chapter 7).

This was an unsecured loan for a Timeshare purchase.  It is NOT counted as income for Federal Tax filing in TurboTax but it is count as income for Massachusetts State Tax filing.

My question, is the $26,031.40 exempt from being counted as income in the state of Massachusetts and if so, how do I exclude it from being counted as income in TurboTax form the Massachusetts State Tax filing?

Thank you so much and have a great day!

[AlexanderS08]

No, unfortunately MA decoupled from the Federal law and does allow for an exclusion, even if Bankruptcy was applicable for a Federal exclusion.

[Immortalways]

Please cite the law you are talking about??

I have no idea what you mean, Massachusetts decoupled from allowing ANY AND ALL bankruptcy? Please explain

[Immortalways]

Please explain exactly which law section you are referring to!?? I don’t understand, Massachusetts decoupled from any and all bankruptcy laws??

[CatinaT1]

You are commenting on an old thread. What is your question? Or what are you trying to do and we can help.

[Immortalways]

I have seen two people struggle with reporting CODI income 1099-C due to discharge of indebtedness in claiming the insolvency exception

using form 982 you claim insolvency 

2 people in different turbo tax threads have stated that when they try to claim insolvency, the Federal amount goes to 0 as it should, but the state amount does not change and does not reflect the CODI insolvency exception

The states were California and massachusssets which both Definitely allow for cancellation due to insolvency in their state tax code (they follow IRC108 ) 

i would like you to please tell me why or how it would be possible that the state return was not adequately adjusted on the turbo tax software?

I am unaware if they were using a desktop version or not

regardless have you heard of this problem? The state tax return not updating the insolvency amount while the federal return does?

since you are an expert I would hope you will not say “we need more information sorry” please give me some sort of speculation from your experience 

I trust that an expert will give me an expert response

please!

thank you 

[JulieS]

Yes, TurboTax can handle just about every tax situation, but there are certain complex tax situation that are out of scope for this service. Follow this link for the complete list of out of scope topics and unsupported tax situations. 

Cancellation of debt due to insolvency is listed under Deductions and Adjustments to Income not covered elsewhere.