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Correct $ Amount for Reporting 1099-C

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Question: 
My specific question is involving 1099-C. Due to the treatment of payments with shadow accounting, we have a principal balance showing on a loan that is higher than the amount charged off. IRS regulations dictate stated principal when filing a 1099-C. Which dollar amount would be correct for reporting the 1099-C?
Answer: 

Further in the instructions you quoted you will also find, "Do not include any amount the lender receives in satisfaction of the debt by means of a settlement agreement, foreclosure sale, etc. "

You report the actual amount of debt that is canceled.

In other words you can't claim you canceled more debt than you actually did due to your accounting practices.

First published on BankersOnline.com 11/26/12

First published on 11/26/2012

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