Page 5 of 6 Fileid: … i1099a&c/202201/a/xml/cycle03/source 8:41 - 3-Dec-2021
The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
you are required to report a business or investment debt
discharged in bankruptcy, report it for the later of:
a. The year in which the amount of discharged debt
can first be determined, or
b. The year in which the debt is discharged in
bankruptcy.
A debt is incurred for business if it is incurred in
connection with the conduct of any trade or business
other than the trade or business of performing services as
an employee. A debt is incurred for investment if it is
incurred to purchase property held for investment (as
defined in section 163(d)(5)).
2. Interest. You are not required to report interest.
However, if you choose to report interest as part of the
canceled debt in box 2, you must show the interest
separately in box 3.
3. Nonprincipal amounts. Nonprincipal amounts
include penalties, fines, fees, and administrative costs.
For a lending transaction, you are not required to report
any amount other than stated principal. A lending
transaction occurs when a lender loans money to, or
makes advances on behalf of, a borrower (including
revolving credit and lines of credit). For a nonlending
transaction, nonprincipal amounts are included in the
debt. However, until further guidance is issued, no
penalties will be imposed for failure to report these
amounts in nonlending transactions.
4. Foreign debtors. Until further guidance is issued, no
penalty will apply if a financial institution does not file Form
1099-C for a debt canceled by its foreign branch or
foreign office for a foreign debtor, provided all the
following apply.
a. The financial institution is engaged in the active
conduct of a banking or similar business outside the
United States.
b. The branch or office is a permanent place of
business that is regularly maintained, occupied, and used
to carry on a banking or similar financial business.
c. The business is conducted by at least one
employee of the branch or office who is regularly in
attendance at the place of business during normal
working hours.
d. The indebtedness is extended outside the United
States by the branch or office in connection with that trade
or business.
e. The financial institution does not know or have
reason to know that the debtor is a U.S. person.
5. Related parties. Generally, a creditor is not required
to file Form 1099-C for the deemed cancellation of a debt
that occurs when the creditor acquires the debt of a
related debtor, becomes related to the debtor, or transfers
the debt to another creditor related to the debtor.
However, if the transfer to a related party by the creditor
was for the purpose of avoiding the Form 1099-C
requirements, Form 1099-C is required. See section
108(e)(4).
6. Release of a debtor. You are not required to file
Form 1099-C if you release one of the debtors on a debt
as long as the remaining debtors are liable for the full
unpaid amount.
7.
Guarantor or surety. You are not required to file
Form 1099-C for a guarantor or surety. A guarantor is not
a debtor for purposes of filing Form 1099-C even if
demand for payment is made to the guarantor.
8. Seller financing. Organizations whose principal
trade or business is the sale of nonfinancial goods or
nonfinancial services, and who extend credit to customers
in connection with the purchase of those nonfinancial
goods and nonfinancial services, are not considered to
have a significant trade or business of lending money,
with respect to the credit extended in connection with the
purchase of those goods or services, for reporting
discharge of indebtedness on Form 1099-C. See
Regulations section 1.6050P-2(c). But the reporting
applies if a separate financing subsidiary of the retailer
extends the credit to the retailer's customers.
9. Student loan indebtedness. For discharges
occurring after December 31, 2017, you are not required
to file Form 1099-C for student loan indebtedness if the
discharge of the debt is due to the student's death or
permanent and total disability.
Rev. Proc. 2020-11 establishes a safe harbor
extending the relief provided under Rev. Proc. 2015-57,
2015-51 I.R.B. 863, Rev. Proc. 2017-24, 2017-7 I.R.B.
916, and Rev. Proc. 2018-39, 2018-34 I.R.B. 319, to
additional taxpayers who took out federal or private
student loans to finance attendance at a nonprofit or
for-profit school. Relief is also extended to any creditor
that is an applicable entity, as defined by section 6050P
and the regulations thereunder, that would otherwise be
required to file information returns and furnish payee
statements pursuant to section 6050P for the discharge of
any indebtedness within the scope of this revenue
procedure. The IRS will not assert that a creditor that is an
applicable entity, as defined by section 6050P and the
regulations thereunder, must file information returns and
furnish payee statements pursuant to section 6050P for
the discharge of any indebtedness within the scope of
these revenue procedures. See
Rev. Proc. 2020-11 to
determine whether a creditor or taxpayer qualifies for
relief.
Multiple Debtors
For debts of $10,000 or more incurred after 1994 that
involve debtors who are jointly and severally liable for the
debt, you must report the entire amount of the canceled
debt on each debtor's Form 1099-C. Multiple debtors are
jointly and severally liable for a debt if there is no clear and
convincing evidence to the contrary. If it can be shown
that joint and several liability does not exist, a Form
1099-C is required for each debtor for whom you canceled
a debt of $600 or more.
For debts incurred before 1995 and for debts of less
than $10,000 incurred after 1994, you must file Form
1099-C only for the primary (or first-named) debtor.
If you know or have reason to know that the multiple
debtors were husband and wife who were living at the
same address when the debt was incurred, and you have
no information that these circumstances have changed,
you may file only one Form 1099-C.
Instructions for Forms 1099-A and 1099-C (Rev. 01-2022)
-5-