General Information on Cancellation of Dept of Abandonment of Property:
If you borrow money from a commercial lender and the lender later cancels or forgives the debt, you may have to include the canceled amount in income for tax purposes, depending on the circumstances. When you borrowed the money you were not required to include the loan proceeds in income because you had an obligation to repay the lender. When that obligation is subsequently forgiven or the property is abandoned or foreclosed, the amount you received as loan proceeds is reportable as income. The lender is usually required to report the amount of the canceled debt to you and the IRS on a Form 1099-A, Acquisition or Abandonment of Secured Property, or Form 1099-C, Cancellation of Debt.
Further information on these forms is available in Publication 544 Sales and Other Dispositions of Assets, under the section called "Foreclosures and Repossessions."
Some canceled debts are not includible or fully includible in income. For example, if you have canceled debt on your principal residence, you may be able to exclude part or all of the amount canceled from your income under the Mortgage Forgiveness Debt Relief Act of 2007. For additional information, refer to Publication 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments (for individuals).
Reporting 1099 A, 1099C, or Form 982 within the software
Within OLTPRO WEB Software
To report Form 1099A or 1099C, from the Income Section Checklist, under Other Investment Income, choose to START for either Form 1099A or 1099 C.
If you qualify for Form 982 to exclude this debt from income, report Form 982 in place of Form 1099A or 1099C by choosing to START within the Miscellaneous Section Checklist for Form 982.