U.S. Dept of Ed 1099-C. If TP is insolvent, can form 982 still be used?

[AZ-Tax]

Taxpayer was told a 1099-C from the U.S. Dept of Ed cannot be exempt from income even if taxpayer was insolvent. I did some quick research and could not come up with anything. Anyone familiar with this?

[JohnH]

My guess is that someone is confusing the bankruptcy laws with the COD income requirements.
Off the top of my head, I'd say that if the taxpayer is insolvent, they can exclude the COD income.
But I'd like to see what others have to say.

[rkhan71]

Same Idea

I would say the same thing about cancellation of debt issue.

Ray

[JohnH]

Since this comes from US Dept of Ed, there is another possibility. Might this be cancellation of debt in exchange for teaching in certain types of schools, fields of education, or other parameters? If so, it has its own special category for excluding from income which has nothing to do with insolvency.

[AZ-Tax]

1099-misc description

Since this comes from US Dept of Ed, there is another possibility. Might this be cancellation of debt in exchange for teaching in certain types of schools, fields of education, or other parameters? If so, it has its own special category for excluding from income which has nothing to do with insolvency.

1099-C Debt Description "Fed Student Loan". Both box 2 & 3 have amts and box 5 is checked.

[Gary2]

1099-C Debt Description "Fed Student Loan". Both box 2 & 3 have amts and box 5 is checked.

The 1099-C won't tell you whether this loan qualifies for the student loan exception, other than possibly confirming that it came from a qualified lender. The loan must have been written with such forgiveness provisions. Unfortunately, section 108(f), which contains this exception, doesn't provide more guidance, but I imagine reading the original loan documents would shed light.