home, furniture, car, jewelery, etc. as assets, but do I also list a 401K?
When making a debit versus asset list, in order to claim insolvency for IRS (1099-C ), I know I must list?
You need to list all of your assets that have market value, and you use only the market value, not historic value or anything else. You count only what you could get if you sold it today.
The definition of "market value" is whatever a reasonable seller can get from a reasonable buyer.
That means that almost everything you have is junk and worthless. Think about what you can sell if you advertised or went to a pawn shop and what you would get, when it comes to your physical assets.
When you list your investments and retirement accounts, call the bank or plan manager and just ask what it's worth if you close the account today. The amount you report is "net", not the total. If there are penalties for withdrawal, you have to subtract that from the total. (You don't have to actually close the accounts, you just need to know what they're worth.)
For the car, the low Kelly Blue Book value is a reliable estimate. You need to be able to justify the high KBB value before you can use it, and few people can unless they really baby their cars and keep all the repair receipts.
(Adding up all of our debt should be easy. You just use the current account balances. Keep all of this in your notes in event of an audit for 4 years--3 years plus the current tax year.)
According to the IRS, this is the formula for solvency:
total assets - total debts = net worth
If your net worth is negative, you're insolvent. If any of your debts are forgiven, you don't have to report any of it until it brings your net worth to a positive number. Any amount above zero is the taxable portion.
(I think you're going to end up ignoring that 1099-c. These are usually based on single amounts and can't take into account your entire situation.)
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