Form 1099-C

Form 1099-C

A form that a lender files with the IRS if it cancels a debt in excess of $600. Lenders are required to file 1099-C whether the borrower is a natural person or legal person.
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The record retention rules for 2013 are as follows: Forms W-2 must be saved for four years after the due date of the report, and Forms 1099 must be kept for three years from the due date of the return; four years for Form 1099-C or if backup withholding was imposed.
However, taxpayers should be aware that a lender's obligation to issue Form 1099-C may not necessarily coincide with debt forgiveness or a requirement to recognize COD income.
6050P-1 provides Form 1099-C reporting guidance to lenders and specifies that reportable debt cancellation is triggered at the occurrence of an "identifiable event" indicating the debt will not be repaid.
6050P-1(b) (1) states that the eight circumstances are outlined for Form 1099-C reporting purposes only; they do not by themselves indicate whether the taxpayer should include COD in income that year.
In this environment, tax advisers may consider whether their clients should issue a Form 1099-C, Cancellation of Debt, for a bad debt.
The Form 1099-C instructions identify who must issue the form.
IRS Service Center Advice (SCA) 1998-020 addressed whether "an individual or entity not required to file a Form 1099-C under Section 6050P of the Internal Revenue Code [may] nevertheless voluntarily file the form.
The creditor issued T Form 1099-C, Cancellation of Debt, under Regs.
Taxpayers who have not reported Form 1099-C income have been required to include those amounts; see, eg.
Form 1099-C, Cancellation of debt: Revisions to the Form 1099-C instructions eliminate the requirement to report separately penalties, fines and administrative costs when reporting a canceled debt.
31, 1993, and a new form, Form 1099-C, Cancellation of Debt, has been released--to report the collected information.
However, discharges related to agreements between the creditor and debtor are required to be reported in 1994 on Form 1099-C.