Form 1099-C (2017) — Cancellation of Debt Filing Checklist
Purpose
Form 1099-C reports the discharge of debt of $600 or more to the debtor and the IRS.
According to the 2017 instructions, identifiable events trigger reporting even before actual discharge occurs. Creditors must report by February 28, 2018, for paper filing, or by March 31, 2018, for electronic filing (extended to April 2, 2018, because March 31 fell on a Saturday).
Identifiable event codes in Box 6 range from A through H and define the specific circumstances that trigger the reporting requirement.
Creditor Preparation Steps
Verify Event Timing and Thresholds
● Verify that a discharge or identifiable event occurred in the 2017 calendar year. Box 1 date must reflect the earliest identifiable event or actual discharge before the identifiable event per 2017 instructions.
● Confirm debt amount meets $600 threshold in Box 2. The 2017 guidance specifies that this applies to actual discharge. Identifiable events below $600 are not reportable.
● Complete Box 6 identifiable event code using codes A through H only.
○ Code A indicates bankruptcy.
○ Code B indicates judicial relief.
○ Code C indicates statute or deficiency expiration.
○ Code D indicates a foreclosure election.
○ Code E indicates probate.
○ Code F indicates an agreement.
○ Code G indicates collection discontinuation.
○ Code H indicates other pre-identifiable discharge.
● Isolate and enter interest separately in Box 3 if included in the Box 2 amount. The 2017 instructions require this separation to aid debtor determination of taxable versus non-taxable interest under Publication 4681.
Property and Liability Information
● If foreclosure or abandonment occurred in the same calendar year, enter the fair market value in Box 7 or furnish a separate Form 1099-A. The 2017 instructions specify that the gross foreclosure bid price equals fair market value. Abandonment uses appraised value.
● Complete Box 5 checkbox only if the debtor was personally liable for the debt at creation or last modification. The 2017 instructions distinguish personal liability status for non-recourse debt exclusion analysis.
Taxpayer Identification and Privacy Requirements
The creditor must report the full debtor identification number to the IRS on Copy A. Creditors may truncate the debtor's taxpayer identification number on Copy B sent to the debtor by showing only the last four digits.
This privacy protection applies to Social Security numbers, individual taxpayer identification numbers, adoption taxpayer identification numbers, and employer identification numbers. The creditor's taxpayer identification number may not be truncated on any form.
Form Preparation and Distribution
● Assemble Copy A (scannable red form—do not print from website), Copy B (debtor copy in black, may print from website), and Copy C (creditor copy). The 2017 instructions warn that printed Copy A from the website is not scannable. You must order official forms from IRS.gov/orderforms for Copy A compliance.
● Furnish Copy B to the debtor by January 31, 2018. The 2017 due date is fixed. No extension is provided for creditors in the instructions.
● File Copy A with the IRS by February 28, 2018, for paper filing or March 31, 2018, for electronic filing. For 2017 returns filed in 2018, the electronic deadline extends to April 2, 2018, because March 31 falls on a Saturday.
● File Form 1096 transmittal with Copy A if filing paper. The 2017 instructions require a 1096 cover sheet for batched 1099-C filings.
● If filing electronically, use the IRS FIRE system with software that generates a file per Publication 1220 specifications. The 2017 instructions note that the IRS does not provide a fill-in form option for electronic filing. The FIRE system is the designated system for filing Form 1099-C electronically.
Year-Specific 2017 Updates and Regulatory Notes
Identifiable Event Reporting Clarifications
The 2017 instructions clarify that identifiable events are reportable even if actual discharge has not occurred. Creditors must follow Box 6 codes A through H to denote event type. Publication 4681 cross-reference expands debtor guidance on exceptions, including bankruptcy, insolvency, and principal residence exclusion per Publication 523.
Copy A Scanning Requirements
Copy A scanning requirement is strictly enforced for 2017. Website-printed Copy A is non-scannable and triggers a penalty under General Instructions for Certain Information Returns Part O. Official forms from IRS.gov/orderforms are mandatory for Copy A compliance.
Filing Deadlines and Electronic Processing
Dual filing deadlines apply for 2017 tax year forms filed in 2018. The paper deadline is January 31 for the debtor and February 28 for the IRS. The electronic deadline is March 31 to the IRS (extended to April 2, 2018, because March 31 is a Saturday). Electronic filers receive an extended processing window through the FIRE system.
Interest Reporting and Debt Exclusion Analysis
Box 3 interest isolation requirement is reinforced in the 2017 guidance. Creditors must separate interest from principal to assist the debtor in applying Section 108 exclusions. The debtor uses Publication 4681 worksheets to determine excludable amounts.
Technical Reference Publications
The 2017 instructions reference three publications for information return printing standards: Publication 1141, Publication 1167, and Publication 1179. For electronic filing, the FIRE system provides the alternative filing method. No changes apply to the underlying debt discharge rules themselves for the 2017 tax year.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
