8118 / Does the issuance of a Form 1099-C definitively establish discharge of debt income?

No to both parts of the question. As to whether the issuance of a Form 1099-C definitively establishes discharge of debt income, the regulations state that the occurrence of an identifiable event is solely for the purpose of triggering the creditor’s reporting requirement. Additionally, the regulations make it clear that the discharged debt must be reported on Form 1099-C without regard to whether the debtor is required to include it in gross income. Therefore, in spite of receiving a Form 1099-C, the taxpayer may challenge whether the discharged debt is subject to tax.

Example: In 2025, Asher receives a Form 1099-C from a credit card company listing $100,000 of discharged debt. However, before and after the discharge, Asher is insolvent. Because of the insolvency exclusion (discussed in Q 8134), none of the discharged debt would be includible in gross income. Therefore, on Form 982 attached to Form 1040, Asher would check line 1b (discharge of indebtedness to the extent of insolvency) for it to be excluded from gross income.

As to whether the issuance of Form 1099-C definitively establishes the year of discharge, case law indicates that the taxpayer may contest whether the identifiable event was correctly identified as well as whether it actually occurred in the year in which the Form 1099-C was issued.

Example: In 2009, Asher was in default on credit card debt and ceased making any payments. In 2013, the applicable statute of limitations for collection expired. Subsequently, in 2025, the credit card company issued a Form 1099-C to Asher reporting the discharge of the delinquent credit card balance (listing Code C in Box 6 – statute of limitations or expiration of deficiency period as identifiable event). Since the statute of limitations expired in 2012, the Form 1099-C was issued in the wrong year. Thus, Asher may contest the inclusion of the discharge of debt income for tax year 2025.