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Form 1099-C reporting the aggregate canceled debt or

judgment or decision of a court and the appeal period has

may file Form 1099-C for that creditor's part of the

expired. Enter “C” in box 6 to report this identifiable event.

canceled debt. Use any reasonable method to determine

4. A cancellation or extinguishment when the creditor

the amount of each creditor's part of the canceled debt.

elects foreclosure remedies that by law extinguish or bar

Debt owned by a partnership is treated as owned by

the creditor's right to collect the debt. This event applies to

the partners and must follow the rules for multiple

a mortgage lender or holder who is barred by local law

creditors.

from pursuing debt collection after a “power of sale” in the

mortgage or deed of trust is exercised. Enter “D” in box 6

Pass-throughs and REMICs. Until further guidance is

to report this identifiable event.

issued, no penalty will apply for failure to file Form

5. A cancellation or extinguishment making the debt

1099-C, or provide statements to debtors, for a canceled

unenforceable under a probate or similar proceeding.

debt held in a pass-through securitized debt arrangement

Enter “E” in box 6 to report this identifiable event.

or held by a REMIC. However, see item 3 under Safe

harbor rules, earlier.

6. A discharge of indebtedness under an agreement

between the creditor and the debtor to cancel the debt at

A pass-through securitized debt arrangement is any

less than full consideration (for example, short sales).

arrangement in which one or more debts are pooled and

Enter “F” in box 6 to report this identifiable event.

held for 20 or more persons whose interests in the debt

are undivided co-ownership interests that are freely

7. A discharge of indebtedness because of a decision

transferable. Co-ownership interests that are actively

or a defined policy of the creditor to discontinue collection

traded personal property (as defined in Regulations

activity and cancel the debt. A creditor's defined policy

section 1.1092(d)-1) are presumed to meet these

can be in writing or an established business practice of

requirements.

the creditor. A creditor's established practice to stop

collection activity and abandon a debt when a particular

Debt Defined

nonpayment period expires is a defined policy. Enter “G”

A debt is any amount owed to you, including stated

in box 6 to report this identifiable event.

principal, stated interest, fees, penalties, administrative

8. Other actual discharge before identifiable event.

costs, and fines. The amount of debt canceled may be all

Enter “H” in box 6 if there is an other actual discharge

or only part of the total amount owed. However, for a

before one of the identifiable events listed above.

lending transaction, you are required to report only the

stated principal. See Exceptions, later.

Exceptions

You are not required to report on Form 1099-C the

When To File

following.

Generally, file Form 1099-C for the year in which an

1. Certain bankruptcies. You are not required to report

identifiable event occurs. See Exceptions, later. If you

a debt discharged in bankruptcy unless you know from

cancel a debt before an identifiable event occurs, you may

information included in your books and records that the

choose to file Form 1099-C for the year of cancellation.

debt was incurred for business or investment purposes. If

No further reporting is required even if a later identifiable

you are required to report a business or investment debt

event occurs with respect to an amount previously

discharged in bankruptcy, report it for the later of:

reported. Also, you are not required to file an additional or

a. The year in which the amount of discharged debt

corrected Form 1099-C if you receive payment on a prior

first can be determined, or

year debt.

b. The year in which the debt is discharged in

When Is a Debt Canceled

bankruptcy.

A debt is deemed canceled on the date an identifiable

A debt is incurred for business if it is incurred in

event occurs or, if earlier, the date of the actual discharge

connection with the conduct of any trade or business

if you choose to file Form 1099-C for the year of

other than the trade or business of performing services as

cancellation. An identifiable event is one of the following.

an employee. A debt is incurred for investment if it is

1. A discharge in bankruptcy under Title 11 of the U.S.

incurred to purchase property held for investment (as

Code. For information on certain discharges in bankruptcy

defined in section 163(d)(5)).

not required to be reported, see Exceptions, later. Enter

2. Interest. You are not required to report interest.

“A” in box 6 to report this identifiable event.

However, if you choose to report interest as part of the

2. A cancellation or extinguishment making the debt

canceled debt in box 2, you must show the interest

unenforceable in a receivership, foreclosure, or similar

separately in box 3.

federal nonbankruptcy or state court proceeding. Enter

3. Nonprincipal amounts. Nonprincipal amounts

“B” in box 6 to report this identifiable event.

include penalties, fines, fees, and administrative costs.

3. A cancellation or extinguishment when the statute

For a lending transaction, you are not required to report

of limitations for collecting the debt expires, or when the

any amount other than stated principal. A lending

statutory period for filing a claim or beginning a deficiency

transaction occurs when a lender loans money to, or

judgment proceeding expires. Expiration of the statute of

makes advances on behalf of, a borrower (including

limitations is an identifiable event only when a debtor's

revolving credit and lines of credit). For a nonlending

affirmative statute of limitations defense is upheld in a final

transaction, nonprincipal amounts are included in the

debt. However, until further guidance is issued, no

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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 4

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