Cancellation of Debt

[Hastin]

Client owed McDuff $3400, collection agency said if they would pay $1700 they
would cancel the other 1700. They paid the 1700 but recieived a Form 1099-C
Cancellation of Debt. this person is an individual and not a business.
Do they have to included the 1700 that was cancelled as income.

[Brian EA]

Client owed McDuff $3400, collection agency said if they would pay $1700 they
would cancel the other 1700. They paid the 1700 but recieived a Form 1099-C
Cancellation of Debt. this person is an individual and not a business.
Do they have to included the 1700 that was cancelled as income.

It's considered income. Report it on line 21 with the description- cancellation of debt

[Bird Legs]

Cancellation of Debt

This would be income unless the client can prove insolvency just before the cancellation.