Have a 1099-C and am not certain how to handle this.
Other Boxes:
#4 Debt description - DDA CHECK FRAUD
#5 Was borrower personally liabile for repayment of this debt? NO
#6 Bankuptcy NO

Since it states that I was not personally liabile for repayment of this debt - is this just not included on my taxes. When I use a tax program, it only as for the amount in Box 2 and never asks question 5 that I can find.

Would appreciate advise on this..

Thank you!

Since your are not personally liable to pay the amount, it is not income. Just keep the form for your info.
Your U.S. Tax Return: The U.S. Income Tax Topics 1 (http://taxipay.blogspot.com/2008/08/us-income-tax-topics-1.html)

It's not clear to me how this "check fraud" is considered as cancellation of debt to you - if you could provide some additional background it would be helpful. Mukata is correct that cancelation of debt that you are not liable for is not income to you - however it may still have to reported if either (a) the lender offered you a discount for early payment of the debt, or (b) agrees to a loan modification that reducs the principal balance of the debt. You may also realize a captal gain if/when you sell the property as your proceeds from the sale includes the unpaid amount of debt. There are more details in Pub 4681:
http://www.irs.gov/pub/irs-pdf/p4681.pdf