Must I report my 1099C amount as income on my Federal Tax Return?

I paid off an old credit card debt. They offered me a settlement amount and I paid it off. The company that I paid it off with sent me a 1099C %26quot;Cancellation of Debt%26quot; Form. A copy of which was sent to the IRS. The instructions on the form said there are some exclusions. One exclusion is %26quot;certain debts reduced by the seller after purchase%26quot;. Does anyone know anything about this? Thanks in advance.

Must I report my 1099C amount as income on my Federal Tax Return?fast loan

1)Review the backside of your copy of the 1099C for instructions on how to or if to report.

2)page 18 of publication 525 (irs.gov)

Generally, if a debt you owe is canceled or forgiven, other than as a gift or bequest, you must include the cancelled amount in your income. ...nonbusiness debt...include the income on line 21

3)page 21 of Publication 908 Review

Debt Cancellation and Exceptions and Exclusions

Just know that if you do not report or explain why you are not reporting the 1099C, the IRS will be sending you a CP2000, which will require a response.

Must I report my 1099C amount as income on my Federal Tax Return?

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Based on your message, it seems the only exception for which you might qualify would be insolvency. If you were insolvent just prior to the cancellation of the debt, you can exclude the debt cancellation from income to the extent of your insolvency.

Insolvency basically means you had a negative net worth at the time of the debt cancellation. The fair market value of all your assets would have to have been less than your total debt owed.|||I cannot give you an authoritive answer, you need the help of a competent tax expert on this.

In the meantime, get a copy of IRS Instructions for Forms 1099-A and 1099-C. Those instructions contain on its page AC-s a section called %26quot;Exceptions.%26quot; I just finished rereading that document and still cannot give you a clear answer.

Do not just accept %26quot;opinions.%26quot; This is a serious matter.The IRS Instructions are not easy to understand.

I am also interested in this subject and will watch to see if a qualified person gives you a good answer.

I suggest you get the IRS Instructions soon.. Get familiar with it so that you can understand what a tax professional will tell you.

I also suggest that you edit your Answers request and instruct answerers to accompany their answers with identification of their own qualifications.

Good luck|||%26quot;certain debts reduced by the seller after purchase%26quot;

does not apply to you.

This is when I buy widget to resell from a manufacturer and the manufacturer extends me credit to buy them from him.

Your bank is the guy who lent you credit to go buy gas, food, clothes, etc. The bank is not %26quot;the seller.%26quot;