How to Fill Out IRS Form 1099-C
IRS Form 1099-C, entitled "Cancellation of Debt," is sent to taxpayers who were insolvent and had their debt(s) canceled by a creditor. The cancelled portion of the unpaid debt is treated as income by the Internal Revenue Service. This article is written from the point of view of the entity filling out the 1099-C, not the person receiving it.
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Instructions
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Call (800) TAX-FORM or visit the IRS online form ordering website (see resources below) to obtain acceptable copies of Form 1099-C to send to recipients. Although Form 1099-C is available for viewing online, the e-version of the form is unacceptable to send to shareholders or the Internal Revenue Service.
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Check the "Void" or "Corrected" box at the top of the 1099 form if applicable. Enter the Creditor's name, street address, city, state and ZIP code in the first box. The Creditor is the entity to whom the taxpayer owed money until the debt was cancelled.
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Enter the Creditor's Federal identification number and the Debtor's (taxpayer's) identification number (usually a Social Security number or an EIN) in the two boxes beneath the first box. Below this, list the Debtor's name, street address (including apartment number), city, state and ZIP code. If applicable, enter the account number that is associated with this transaction.
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List the date the debt was cancelled in Box 1. In Box 2, show the amount of debt cancelled. Indicate the amount of interest (if any) that was included in the cancelled debt in Box 3. Box 4 is intentionally left blank.
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Provide a description of the cancelled debt in Box 5. If Box 7 is also filled out, the description in Box 5 must concern real property. Check Box 6 if an official bankruptcy filing affected the cancelled debt. In Box 7 show the fair market value (FMV) of any property the Debtor lost during the current tax year due to foreclosure or abandonment.
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File Form 1099-C with the IRS; also send a copy to the recipient. Check the IRS official website (see resources below) for specific instructions as to the filing deadline for Form 1099-C; it changes annually. A copy of Form 1099-C must be sent to the stockholder by January 31 of the year following the exchange.
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