1099-c - cancelled in 2015 but on 2014 form

[dkss]

I have a client that just brought me a 2014 Form 1099-C. The cancelled date is in 2015! Should I add to line 21 and then back out with an explanation? Let's assume the debt was really cancelled in 2015 and it was not a typo by the bank (client is verifying this info with the bank, as we speak).

What would you do?

[kamckinley]

You mean they sent your client a 2014 Form 1099-C for a debt that was cancelled in 2015? Or was she issued a 1099-C in 2014 and a corrected one in 2015? It's possible that the identifiable date on the 2014 1099-C is a 2015 date. The financial institution can cancel the debt before the identifiable date (for example, if they client filed bankruptcy in 2015, but the financial institution cancelled the debt in 2014). If that's the case, then I would go ahead and report it on Form 982 for 2014. If she qualifies for one of the exemptions (insolvency, bankruptcy) it shouldn't affect her taxes anyway.

If I misunderstood your question, please clarify. Hope this helps!

[DaveinTexas]

Another exemption

Just an FYI:

Here is another way to avoid taxation on these pesky 1099-Cs, albeit the issue in this article (see link) may only happen once in a blue moon. But, I did use this technique effectively when responding to a CP2000 for a client that omitted a 1099-C on their prior year return.

Here is the link: http://www.accountingtoday.com/news/...C-62781-1.html

I hope all is well with the Board!