If you received a 1099-C for a cancellation of debt, you must include the amount of the cancellation in your income. This is because you received a benefit from having the debt discharged.
Under certain conditions, you can file Form 982 to exclude or reduce the amount of the cancellation of debt from your income.
- Federal Section
- Less Common Income
- Cancellation of Debt Form 1099-C, Form 982
- Exclusions (Form 982)