The main attribute you want to reduce in this situation is the basis of the house itself, by the amount of the debt forgiven. Use line 10b on the 982 for that (if you kept the house). (If you didn't keep the house, then consider using your Section 121 exclusion from gain of sale of principle residence, rather than the 982.)

Your 401(k) doesn't usually have a basis (which would be after-tax contributions), so don't worry about that one. The basis of your personal assets can be reduced to zero.

If you run out of places to reduce your attributes (basis), then stop. You are not actually required to account for the entire cancelled debt, just to make sure that you will recover as much as possible (pay tax on) when you sell any of your remaining possessions in the future.

When you say you refi'd the loan, did you get out more than the original purchase price? You can see more about it here -- http://www.irs.gov/pub/irs-pdf/p4681.pdf
There is an example on page 7 worth reviewing.

Thank you for your answer. Here are a few more facts. The original purchase price was 190000.00 but over the years we actually increased the loan to 434000.00 which I really wish we wouldn't have done now. HIndsight, you know what they say. This was done in about 4 refi'ds. We spent about 60,000.00 of that on improvements to the home over the years (we owned home for 18 years) and used the rest to pay bills, etc. My husband lost his job and things just went downhill from there. So I added the 60,000.00 to the basis of the home as I have receipts for that, but I know the majority of the money we got we can not count and that is why I think I need to do insolvency. We no longer have the home, short sale, sold for 235000.00. I have very publication the IRS has about this, 982, 908, 544, 4681, 551, and 523 trying to learn how to do this. So I am just worrying about how best to do this. Anything you can add is greatly appreciated. Thank you