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1. You are an entity described under Who Must File

company or credit card company (whether or not affiliated

later, and

with a financial institution). The lending of money is a

significant trade or business if money is lent on a regular

2. An identifiable event has occurred. It does not

and continuing basis. Regulations section 1.6050P-2(b)

matter whether the actual cancellation is on or before the

lists three safe harbors under which reporting may not be

date of the identifiable event. See When Is a Debt

required for the current year. See Safe harbor rules next.

Canceled, later.

Form 1099-C must be filed regardless of whether

Safe harbor rules. The three safe harbor rules in which

the debtor is required to report the debt as

an entity will not be considered to have a significant trade

income.

or business of lending money are the following.

CAUTION

1. No prior year reporting required. An organization

The debtor may be an individual, corporation,

will not have a significant trade or business of lending

partnership, trust, estate, association, or company.

money for the current year if the organization was not

Do not combine multiple cancellations of a debt to

required to report in the prior year and if its gross income

determine whether you meet the $600 reporting

from lending money in the most recent test year (see (3)

requirement unless the separate cancellations are under a

below) is less than both 15% of the organization's gross

plan to evade the Form 1099-C requirements.

income and $5 million.

2. Prior year reporting requirement. An organization

Coordination With Form 1099-A

that had a prior year reporting requirement will not have a

If, in the same calendar year, you cancel a debt of $600 or

significant trade or business of lending money for the

more in connection with a foreclosure or abandonment of

current year if, for each of the 3 most recent test years, its

secured property, it is not necessary to file both Form

gross income from lending money is less than both 10%

1099-A, Acquisition or Abandonment of Secured

of the organization's gross income and $3 million.

Property, and Form 1099-C for the same debtor. You may

3. No test year. Newly formed organizations are

file Form 1099-C only. You will meet your Form 1099-A

considered not to have a significant trade or business of

filing requirement for the debtor by completing boxes 4, 5,

lending money even if the organization lends money on a

and 7 on Form 1099-C. However, you may file both Forms

regular and continuing basis. However, this safe harbor

1099-A and 1099-C; if you do file both forms, do not

does not apply to an entity formed or availed of for the

complete boxes 4, 5, and 7 on Form 1099-C. See the

principal purpose of holding loans acquired or originated

instructions for Form 1099-A, earlier, and Box 4, Box 5,

by another entity. In this instance, the transferee entity

and Box 7, later.

(including real estate mortgage investment conduits

Who Must File

(REMICs) and pass-through securitized indebtedness

arrangements) may be required to report cancellation of

File Form 1099-C if you are any of the following.

indebtedness on Form 1099-C. See Regulations section

1. A financial institution described in section 581 or

1.6050P-1(e)(5).

591(a) (such as a domestic bank, trust company, building

and loan association, or savings and loan association).

Test year defined. A test year is a tax year of the

2. A credit union.

organization that ends before July 1 of the previous

calendar year. For example, X, a calendar year taxpayer

3. Any of the following, its successor, or subunit of one

who has a significant trade or business of lending money,

of the following.

is formed in year 1. X will not have a test year in year 1 or

a. Federal Deposit Insurance Corporation.

year 2. However, for year 3, X's test year will be year 1. In

b. National Credit Union Administration.

year 3, year 1 is the only year that ended before July 1 of

c. Any other federal executive agency, including

the previous calendar year (in this example, year 2).

government corporations.

Penalties. There are penalties for failure to file correct

d. Any military department.

information returns by the due date and for failure to

furnish correct payee statements. See part O in the 2018

e. U.S. Postal Service.

General Instructions for Certain Information Returns for

f. Postal Rate Commission.

details.

4. A corporation that is a subsidiary of a financial

Exceptions. Until further guidance is issued, no

institution or credit union, but only if, because of your

penalty will apply for failure to file Form 1099-C, or provide

affiliation, you are subject to supervision and examination

statements to debtors, for amounts:

by a federal or state regulatory agency.

Discharged in nonlending transactions, or

5. A federal government agency including:

Forgiven pursuant to the terms of a debt obligation.

a. A department,

Multiple creditors. If a debt is owned (or treated as

b. An agency,

owned for federal income tax purposes) by more than one

creditor, each creditor that is described under Who Must

c. A court or court administrative office, or

File, earlier, must issue a Form 1099-C if that creditor's

d. An instrumentality in the judicial or legislative

part of the canceled debt is $600 or more. A creditor will

branch of the government.

be deemed to have met its filing requirements if a lead

6. Any organization whose significant trade or

bank, fund administrator, or other designee of the creditor

business is the lending of money, such as a finance

complies on its behalf. The designee may file a single

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Instructions for Forms 1099-A and 1099-C (2018)

Instructions For Forms 1099-A And 1099-C - Acquisition Or Abandonment Of Secured Property And Cancellation Of Debt - 2018 Page 3

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