IRS Form 1099 Reporting: File Form 1099-C

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January 03, 2014

File Form 1099-C, Cancellation of Debt, for each debtor for 3 whom you canceled a debt owed to you of $600 or more if: to have a significant trade or business of lending money even if the

  1. You are an entity described under Who Must File on this page and
  2. An identifiable event has occurred. It does not matter whether the actual cancellation is on or before the date of the identifiable event.

The debtor may be an individual, corporation, partnership, trust, estate, association, or company. Do not combine multiple cancellations of a debt to determine whether you meet the $600 reporting requirement unless the separate cancellations are under a plan to evade the Form 1099-C requirements.

If, in the same calendar year, you cancel a debt of $600 or more in connection with a foreclosure or abandonment of secured property, is not necessary to file both Form 1099-A, Acquisition or Abandonment of Secured Property, and Form 1099-C for the same debtor. You may file Form 1099-C only. You will meet your Form 1099-A filing requirement for the debtor by completing boxes 4, 5, and 7 on Form 1099-C. However, you may file both Forms 1099-A and 1099-C; if you do, do not complete boxes 4, 5, or 7 on Form 1099-C.

Box 1. Date Canceled

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Enter the date the debt was canceled.

Box 2. Amount of Debt Canceled

Enter the amount of the canceled debt. Do not include any amount the lender receives in satisfaction of the debt by means of a settlement agreement, foreclosure sale, etc.

Box 3. Interest if Included in Box 2

Enter any interest you included in the canceled debt in box 2. You are not required to report interest in box 2. But if you do, you also must report it in box 3.

Box 4. Debt Description

Enter a description of the origin of the debt, such as student loan, mortgage, or credit card expenditure. Be as specific as possible. If you are filing a combined Form 1099-C and

1099-A, include a description of the property.

Box 5. Was Debtor Personally Liable for Repayment of the Debt

If the debtor was personally liable for repayment of the debt at the time the debt was created or, if modified, at the time of the last modification, enter an “X” in the checkbox.

Box 6. Check for Bankruptcy

Check the box if you are reporting a debt discharged in bankruptcy.

Box 7. Fair Market Value (FMV) of Property

If you are filing a combined Form 1099-C and 1099-A for a foreclosure, execution, or similar sale, enter the FMV of the property. Generally, the gross foreclosure bid price is considered to be the FMV. If an abandonment or voluntary conveyance to the lender in lieu of foreclosure occurred, enter the appraised value of the property.

Jennifer A. Driskill, CPA, M.B.A., James Dee Johnson & Company, CPAs, P.C.

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