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.