Form 1099-C

What is Form 1099-C? 

Form 1099-C (Cancellation of Debt) is an IRS form that is used to report cancelled debt worth $600 or more to the IRS. Taxpayers who had their qualifying debt cancelled are sent a copy of 1099-C by their lender or creditor. 

Common scenarios include canceled credit card debt, repossessed vehicles, or foreclosed real estate. 

What is “Cancelled Debt”? 

The IRS classifies a debt as “cancelled” if it falls under the specific conditions called “identifiable events.” Each event is assigned a specific code (A–H), which has to be entered in Box 6 of the 1099-C form. 

• Bankruptcy Discharge (Code A) 

If a debt is discharged through bankruptcy proceedings.
 

• Receivership, Foreclosure, or Court Ruling (Code B) 

If a debt is cancelled through a court proceeding.
 

• Expiration of Statute of Limitations (Code C) 

If a court rules that a debt cannot be collected due to expired legal time limits.
 

• Foreclosure Barred by Law (Code D) 

If a lender chooses foreclosure over collection and is legally barred from further debt collection. 

• Debt Canceled in Probate (Code E) 

If a debt becomes unenforceable due to probate or similar legal proceedings. 

• Debt Settlement Agreement (Code F) 

If a debtor and creditor agree to settle a debt for less than the full amount, the canceled portion must be reported. 

• Creditor Policy to Stop Collection (Code G) 

If a creditor has a written policy or standard business practice to stop collecting debts after a set period. 

• Early Discharge Before an Official Event (Code H) 

If a debt is canceled before one of the identifiable events (A–G) officially takes place. 

Who Files Form 1099-C? 

Form 1099-C can be filed by the following: 

• Financial institutions  

• Credit union 

• Federal Deposit Insurance Corporation 

• National Credit Union Administration 

• Federal executive & government agencies 

• Military departments 

• U.S. Postal Services 

• Postal Rate Commission 

• Subsidiaries of a financial institution or credit union 

• Finance company or credit card company  

Filing Form 1099-C 

The IRS requires Form 1099-C to be filled out accurately, with each box and section reporting specific details about the canceled debt. 

Box 1: Date of identifiable event  

The date the debt was forgiven or canceled. 

Box 2: Amount of debt discharged  

The amount of debt that was cancelled. 

Box 3: Interest, if included in box 2 

Any interest included in the canceled debt in box 2 

Box 4: Debt description  

Description of the origin of the debt  

Box 5: Check here if the debtor was personally liable for repayment of the debt  

If the debtor was personally liable for repayment. 

Box 6: Identifiable event code 

Report the nature of the debt with appropriate code  

Box 7: Fair Market Value (FMV) of property 

 FMV of any property associated with the cancelled debt.