What it is:
A tax attribute is a reduction that the tax credit or tax loss when a lender cancels debt that the taxpayer owes. There are typically seven types of tax attributes: net operating losses, business credit carryovers, minimum tax credits, capital losses, property bases, passive activity loss and credit carryover, and foreign tax credit.requires a to make in a
How it works (Example):
John Doe qualifies for a $2,000 minimum tax credit. A tax credit is dollar-for-dollar reduction in John Doe’s tax bill.
However, John Doe also declared bankruptcy, which resulted in his company discharging $1,500 of his credit card debt. Although this means that John Doe no longer owes the $1,500, his tax credit is reduced by that amount.
Themust use Form 982 to reduce his or her tax attributes in a specific order.