Cancellation of Debt - Deceased Taxpayer

[peggysioux]

Deceased taxpayer passed away in 2017. Taxpayer had a school loan that was forgiven due to death and 1099-C was issued in 2017 under taxpayer's social security #. Taxpayer had very little income in 2017 ($7,000) but small amount of withholdings on W-2 and no assets. The 1099-C left box 1 blank "date of identifiable event". Being there is no date listed on 1099-C, would other tax preparers include the 1099-C on the individual 1040 or file a 1041 for the 1099-C income that would include a 982 being taxpayer was insolvent? I am inclined to include with 1040 but wanted feedback from other tax preparers.

Much appreciated!!

Peggy Sioux

[Burke]

Does 1099-C show 2017 or 2018 at top of form? If 2017, then report on 2017 return.

[peggysioux]

1099-C - Deceased Taxpayer

Does 1099-C show 2017 or 2018 at top of form? If 2017, then report on 2017 return.

1099-C is 2017. So you agree to report on 1040, correct?

Much appreciated.

Peg

[Burke]

Instructions say to report in income in the year "the debt is discharged." What code is in Box 6? If the TP does not know or cannot tell by the code on the form, then he needs to call the lender and determine this. See IRS Tax Topic 431, especially paragraph 4. He does not have to report it until it is actually written off and no further collection activity will occur. Your post says "forgiven due to death." Is there some documentation to that effect? If so, use that date, but I would be concerned about Box 1 not showing anything.