khilliard
Mar 10, 2008, 02:19 PM
I have heard that a lienholder can issue a 1099 Form to you for the amount of debt that you owed him. Is this true?
ebaines
Mar 10, 2008, 02:24 PM
Yes, indeed. If someone forgives debt that you owe, then you have received a taxable benefit. The IRS requires the bank toissue a 1099-C reflecting the benefit, and you must include this as income on your taxes.