Form 1099-C (2019) Cancellation of Debt – Paper Filing Checklist
Purpose and Filing Overview
Form 1099-C reports discharge of debt of $600 or more by creditors or federal agencies for the 2019 calendar year. Debtors must report canceled debt as income unless bankruptcy, insolvency, or qualified farm or real property debt exclusions apply. Copy B furnishes debtor notification, and Copy A files with the Internal Revenue Service by February 28, 2020, for paper filing or March 31, 2020, for electronic filing.
Taxpayer Identification Number Requirements
Verify the debtor's taxpayer identification number matches your records before preparing Form 1099-C. Copy A filed with the Internal Revenue Service must show the complete taxpayer identification number without truncation, while Copy B furnished to the debtor may show only the last four digits for privacy protection.
Identifiable Event Date and Code Selection
Identify the earliest identifiable event date from the applicable Box 6 codes and enter the corresponding code for 2019 reporting:
- Code A: Bankruptcy under Title 11
- Code B: Other judicial relief (receivership or foreclosure)
- Code C: Statute of limitations expiration
- Code D: Foreclosure election terminating collection rights
- Code E: Probate or similar court relief
- Code F: Agreement between creditor and debtor
- Code G: Decision or policy to discontinue collection
- Code H: Other actual discharge before identifiable event
Code H applies when you voluntarily discharge debt before meeting statutory or judicial relief triggers in 2019. Enter the date in Box 1 that corresponds to the earliest identifiable event triggering the reporting requirement.
Discharged Debt Amount Calculation
Calculate the Box 2 amount as the total debt discharged in the 2019 calendar year. When debt discharge spans multiple years, report only the amount discharged in 2019 to match the debtor's income inclusion year.
Complete Box 3 only when interest was included in the Box 2 debt amount. You must separate and disclose interest per the 2019 instructions to allow the debtor to determine includibility under Publication 4681 rules.
Debt and Property Description
Enter a debt description in Box 4, such as credit card, loan, or note. When property foreclosure or abandonment triggered the discharge, add a property description and proceed to Box 7 for fair market value reporting.
Personal Liability Indicator
Check Box 5 only when the debtor bore personal liability for repayment when the debt was created or last modified. Non-recourse debt requires Box 5 to remain unchecked for 2019 reporting purposes.
Fair Market Value Reporting
Enter the fair market value in Box 7 only when foreclosure or abandonment occurred in the same calendar year as the discharge. Use the gross foreclosure bid price or appraised value per the 2019 instructions.
Omit Box 7 when you file a separate Form 1099-A for the property transaction. The 2019 instructions clarify that when property foreclosure or abandonment occurs in the same year as debt discharge, you may report fair market value in Box 7 or issue a separate Form 1099-A based on your election for that tax year.
Transmittal Form Preparation
Prepare Form 1096 as the transmittal document for Copy A filing. Aggregate the total discharged debt across all Forms 1099-C issued by your organization for the 2019 tax year on a single Form 1096.
Furnishing Requirements and Form Standards
Furnish Copy B to each debtor by January 31, 2020. Do not print Copy A from the Internal Revenue Service website for filing purposes.
Use official scannable forms ordered from the Internal Revenue Service to comply with scanning requirements. The 2019 instructions explicitly prohibit filing downloaded or printed website versions of Copy A.
Filing Deadlines and Methods
File Copy A with the Internal Revenue Service Service Center by February 28, 2020, for paper delivery. When filing electronically via the FIRE or AIR system, the deadline extends to March 31, 2020, and your software must comply with Publication 1220 specifications.
Record Retention and Event Timing
Retain creditor records such as Copy C or equivalent documentation for Internal Revenue Service correspondence and audit purposes. The 2019 instruction clarification states that the identifiable event may precede actual discharge, so the report is based on whichever occurred first in the tax year.
Corrections Procedures
Issue a corrected Form 1099-C in a subsequent year when the 2019 information was initially incomplete or incorrect. Mark the CORRECTED checkbox on both the debtor Copy B and the Internal Revenue Service Copy A when filing corrections.
Debtor Exclusion Reference
Debtor copies must reference Publication 4681 for bankruptcy, insolvency, qualified farm debt, qualified real property debt, and principal residence exclusion rules specific to the 2019 tax year. Debtors use this publication to determine whether canceled debt qualifies for exclusion from gross income under applicable Internal Revenue Code provisions.
Compliance Summary
The 2019 Form 1099-C reporting requirements mandate accurate taxpayer identification number reporting, proper identifiable event code selection, and timely furnishing of debtor notices. You must use official scannable forms for Internal Revenue Service filing and maintain complete records for correspondence purposes. Electronic filers receive extended filing deadlines but must meet the same January 31, 2020, deadline for furnishing debtor copies.
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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.
