Instructions For Forms 1099-A And 1099-C - 2006
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27Instructions for Debtor
Account number. May show an account or other unique number the creditor
Note. You may not have to include in income a canceled debt (for example,
assigned to distinguish your account.
cancellation of a mortgage) if you are an individual whose principal residence
was in the Hurricane Katrina disaster area on August 25, 2005. This relief
Box 1. Shows the date the debt was canceled.
applies to discharges made on or after August 25, 2005, and before January 1,
Box 2. Shows the amount of debt canceled.
2007. For more details, see Pub. 4492, Tax Information Related to Hurricanes
Katrina, Rita, and Wilma, and the instructions below for canceled debt not
Box 3. Shows interest if included in the canceled debt in box 2. See Pub. 525,
included in income.
Taxable and Nontaxable Income, to see if you must include the interest in
gross income.
If a federal government agency, certain agencies connected with the
Federal government, financial institution, credit union, or an organization
Box 5. Shows a description of the debt. If box 7 is completed, box 5 shows a
having a significant trade or business of lending money (such as a finance or
description of the property.
credit card company) cancels or forgives a debt you owe of $600 or more, this
Box 6. If the box is marked, the creditor has indicated the debt was canceled
form must be provided to you. Generally, if you are an individual, you must
in a bankruptcy proceeding.
include all canceled amounts, even if less than $600, on the “Other income”
line of Form 1040. If you are a corporation, partnership, or other entity, report
Box 7. If, in the same calendar year, a foreclosure or abandonment of property
the canceled debt on your tax return. See the instructions for your tax return.
occurred in connection with the cancellation of the debt, the fair market value
(FMV) of the property will be shown, or you will receive a separate Form
However, some canceled debts are not includible, or fully includible, in your
1099-A, Acquisition or Abandonment of Secured Property. Generally, the gross
income, such as certain student loans (see Pub. 525), certain debts reduced
foreclosure bid price is considered to be the FMV. For an abandonment or
by the seller after purchase (see Pub. 334), qualified farm debt (see Pub. 225),
voluntary conveyance in lieu of foreclosure, the FMV is generally the appraised
qualified real property business debt (see Pub. 334), or debts canceled in
value of the property. You may have income or loss because of the acquisition
bankruptcy (see Pub. 908). Do not report a canceled debt as income if you did
or abandonment. See Pub. 544, Sales and Other Dispositions of Assets, for
not deduct it but would have been able to do so on your tax return if you had
information about foreclosures and abandonments.
paid it. Also, do not include canceled debts in your income to the extent you
were insolvent. If you exclude a canceled debt from your income because it
was canceled in a bankruptcy case or during insolvency, or because the debt
is qualified farm debt or qualified real property business debt, or debt
canceled due to Hurricane Katrina, file Form 982, Reduction of Tax Attributes
Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment).
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