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Lenders or creditors are required to issue Form 1099-C, Cancellation of Debt, if they cancel a debt owed to them of $600 or more. Generally, an individual taxpayer must include all canceled amounts (even if less than $600) on the "Other Income" line of Form 1040.
EXCLUSIONS from Gross Income: Debt canceled in a Title 11 bankruptcy case. Debt canceled to the extent insolvent. Cancellation of qualified farm indebtedness. Cancellation of qualified real property business indebtedness.
Lenders or creditors are required to issue Form 1099-C, Cancellation of Debt, if they cancel a debt owed to them of $600 or more. Generally, an individual taxpayer must include all canceled amounts (even if less than $600) on the "Other Income" line of Form 1040.
In most cases, you have to report canceled debt as ordinary income on your federal tax return\u2014even if the debt was less than $600, and even if you never received a Form 1099-C. List your canceled debt on your Form 1040 under Schedule 1: Other Income.
You must file Form 982 to report the exclusion and the reduction of certain tax attributes either dollar for dollar or 331/3 cents per dollar (as explained later). Certain individuals may need to complete only a few lines on Form 982.
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If you and another person were jointly and severally liable for a canceled debt, each of you may get a Form 1099-C showing the entire amount of the canceled debt. However, you may not have to report that entire amount as income.
A debt exclusion is a temporary increase in property taxes, outside the limits of Proposition 2 ½, to raise the funds necessary to pay debt service costs for a specific capital project. Debt exclusion funds may only be used for that specific project.
If you had a nonbusiness credit card debt can- celed, you may be able to exclude the canceled debt from income if the cancellation occurred in a title 11 bankruptcy case or you were insolvent immediately before the cancellation.
Form 982 is used to determine, under certain circumstances described in section 108, the amount of discharged indebtedness that can be excluded from gross income.
Certain lenders that cancel a debt of $600 or more required to file Form 1099-C with the IRS and issue a copy to the borrower. Taxpayers must report all Form 1099-C income on their returns.

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