Instructions For Forms 1099-A And 1099-C - 2016 (Page 4 of 6) in pdf

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

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

Debt owned by a partnership is treated as owned by

a mortgage lender or holder who is barred by local law

the partners and must follow the rules for multiple

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

creditors.

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

6. A discharge of indebtedness under an agreement

harbor rules, earlier.

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

7. A discharge of indebtedness because of a decision

are undivided co-ownership interests that are freely

or a defined policy of the creditor to discontinue collection

transferable. Co-ownership interests that are actively

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

traded personal property (as defined in Regulations

can be in writing or an established business practice of

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

the creditor. A creditor's established practice to stop

requirements.

collection activity and abandon a debt when a particular

Debt Defined

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

in box 6 to report this identifiable event.

A debt is any amount owed to you, including stated

principal, stated interest, fees, penalties, administrative

8. The expiration of non-payment testing period. This

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

applies only to entities described in numbers (1), (2), (3),

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

and (4) under Who Must File, earlier. This event occurs

lending transaction, you are required to report only the

when the creditor has not received a payment on the debt

stated principal. See Exceptions, later.

during the testing period. The testing period is a 36-month

period ending on December 31, plus any time when the

When To File

creditor was precluded from collection activity by a stay in

bankruptcy or similar bar under state or local law. Enter

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

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

identifiable event occurs. See Exceptions, later. If you

cancel a debt before an identifiable event occurs, you may

The creditor can rebut the occurrence of this

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

identifiable event if:

No further reporting is required even if a later identifiable

a. The creditor (or a third party collection agency on

event occurs with respect to an amount previously

behalf of the creditor) has engaged in significant bona fide

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

collection activity during the 12-month period ending on

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

December 31, or

year debt.

b. Facts and circumstances that exist on January 31

When Is a Debt Canceled

following the end of the 36-month period indicate that the

debt was not canceled.

A debt is deemed canceled on the date an identifiable

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

Significant bona fide collection activity does not include

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

nominal or ministerial collection action, such as an

cancellation. An identifiable event is one of the following.

automated mailing. Facts and circumstances indicating

that a debt was not canceled include the existence of a

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

lien relating to the debt (up to the value of the security) or

Code. For information on certain discharges in bankruptcy

the sale or packaging for sale of the debt by the creditor.

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

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

9. Other actual discharge before identifiable event.

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

2. A cancellation or extinguishment making the debt

before one of the identifiable events listed above.

unenforceable in a receivership, foreclosure, or similar

federal nonbankruptcy or state court proceeding. Enter

Exceptions

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

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

3. A cancellation or extinguishment when the statute

following.

of limitations for collecting the debt expires, or when the

1. Certain bankruptcies. You are not required to report

statutory period for filing a claim or beginning a deficiency

a debt discharged in bankruptcy unless you know from

judgment proceeding expires. Expiration of the statute of

information included in your books and records that the

limitations is an identifiable event only when a debtor's

debt was incurred for business or investment purposes. If

affirmative statute of limitations defense is upheld in a final

you are required to report a business or investment debt

judgment or decision of a court and the appeal period has

discharged in bankruptcy, report it for the later of:

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

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Instructions for Forms 1099-A and 1099-C (2016)

Instructions For Forms 1099-A And 1099-C - 2016 Page 4

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