How to discharge debt?

What "discharge" category do I choose for form 982 if I had debt canceled for teacher loan forgiveness program?

• I received a 1099-C form for a percentage of my student loan that was forgiven for teaching in Kentucky for the past year. I know I do not have to count this as income, but I must file it under "other income" and then do form 982 to show that it is not taxable. I am currently doing taxslayer for my taxes and it has taken me to that form, but I must select from 6 boxes and none of them seem to fit my situation. They are: "discharge of indebtedness in a ..." "title 11 case"; "extent insolvent"; "farm indebtedness"; "real property business indebtedness"; "principal residence indebtedness"; and "Midwestern disasters"!

• Answer:

  Back up. Who cancelled the debt? Was this part of your original loan agreement or not? If you got the loan with the understanding that if you taught in a rerural area, then this is "an exception" and you don't use form 982, but put "see attached" on line 21, attach a letter saying it's an exception and a copy of the loan papers. If there was nothing in the loan and the debt was cancelled from some other program to reward you for doing good work, then it *is* income unless you can show you are insolvent. IRS pub 4681, page 3