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    khilliard's Avatar
    khilliard Posts: 3, Reputation: 1
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    #1

    Mar 10, 2008, 02:19 PM
    1099 form for bad debt?
    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's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    #2

    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.
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