Debt cancellation

[sdtaxman]

Taxpayer received a 1099-c for cancellation of debt in 2012 but paid all except $1500 back in January 2013. They were not in bankruptcy or insolvent. I cannot come up with any other way to exclude the income. Can we net the debt cancellation and the repayment on line 21 of the 1040 with the explanation? Any suggestions? It doesn't seem correct for them to have to pay tax on the debt cancellation for what they paid back.

[Gary2]

Surprisingly, Pub. 525, under Canceled debts, suggests handling this by amending 2012. I suppose the rationale is that the original 1099-C has proved to be invalid.