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A partial list of those who are not eligible for tax services includes individuals who receive income from rental property; have Form 1099-A (Acquisition or Abandonment of Secured Property); Form 1099-C (Cancellation of Debt) for discharged debt other than credit card (Box 4); taxpayers wishing to claim the Home Office Deduction; taxpayers whose business produces a loss.
Lenders are required to issue Form 1099-C, Cancellation of Debt, to borrowers for whom debt has been discharged or forgiven.
Lenders are required to issue Form 1099-C, Cancellation of Debt, to borrowers for whom the lender has discharged or forgiven debt.
The IRS's instructions for Form 1099-C provide that only the creditors who are enumerated in the instructions, that is, the same ones listed in section 60S0P, are to file Form 1099-C.
Because the IRS believes that requiring the filing of Form 1099-C, Cancellation of Debt, at the expiration of a 36-month nonpayment of debt testing period "creates confusion for taxpayers" and does not increase tax compliance, the Service released proposed regulations to eliminate the rule.
In this environment, tax advisers may consider whether their clients should issue a Form 1099-C, Cancellation of Debt, for a bad debt.
6050P and its regulations, COD income of $600 or more must be reported on Form 1099-C, Cancellation of Debt, when any of eight identifiable events occur.
The final regulations limit application of the 36-month, nonpayment testing period (one of eight identifiable events triggering the Form 1099-C, Cancellation of Debt, information reporting requirements) to "applicable financial entities." These include financial institutions, credit unions, and certain of their federally supervised affiliates, as well as the Federal Deposit Insurance Corporation, the Resolution Trust Corporation, the National Credit Union Administration, and other specified federal executive agencies.
The 1996 regulations also instituted a "36-month rule," which created a rebuttable presumption that if a creditor had not received a payment on a loan in 36 months, it was required to issue Form 1099-C.
The creditor issued T Form 1099-C, Cancellation of Debt, under Regs.
In Letter Ruling 200131027, the IRS determined that COD reporting on Form 1099-C, Cancellation of Debt, is not required under a fee-based contractual agreement between a bank and its customer, to cancel all or a portion of the cardholder's account balance on the occurrence of specified events.
* 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.