8120 / What course of action is advised for a taxpayer who receives a Form 1099-C?

As to the first concern, based on the majority view discussed in Q , the taxpayer should contact the creditor to request formal confirmation of its discharge of the debt as well as the year of discharge. By securing a formal confirmation, the creditor would be barred from pursuing legal action against the taxpayer. If the creditor fails to provide the taxpayer with formal confirmation, the taxpayer should attempt to ascertain the validity of the identifiable event the creditor relied upon in issuing the Form 1099-C.

Example: In 2025, Asher received a Form 1099-C from a credit card company. In Box 6, Code G (decision or policy to discontinue collection) was entered. Although Asher requested a formal confirmation of the discharge in 2025, the credit card company failed to respond. Upon further review of his documentation, Asher ascertained the credit card debt was incurred in 2014 and the applicable statute of limitations for collection expired in 2017. Therefore, Code C (statute of limitations or expiration of deficiency period) was the proper identifiable event that should have been reported in 2018. Based on that information, Asher can challenge the inclusion of the discharged debt as income in 2025 as well as defend any subsequent collection action initiated by the credit card company.

As to the second concern, the receipt of a Form 1099-C reporting a substantial amount of discharged debt can be a daunting experience because of a large potential tax liability. As discussed in Q , however, a Form 1099-C is simply a reporting requirement of the creditor and does not establish whether the amount reported is taxable to the debtor. For that reason, the taxpayer should consider the various exclusions (discussed in Q to Q ) that may apply to render all or part of the discharged debt nontaxable.

Example: In 2025, Asher received a Form 1099-C from a credit card company reporting a substantial amount of discharged debt. However, the debt reported on the Form 1099-C was discharged in bankruptcy. Because debt discharged in bankruptcy is excluded from gross income, Asher would not be taxed on such income. Attaching Form 982 to his 2025 Form 1040, Asher should check line 1a, and, thus, exclude it from gross income.