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posted Mar 3, 2024 11:51:14 AM

Received 1099C for Cancellation of Debt

I have a farm that operates as an LLC partnership. I use TurboTax Business for the form 1065. I indicated that I received Cancellation of Debt not related to PPP then continued through the walk through. I was never asked about the cancellation so it doesn't appear anywhere on the Schedule K-1.  It should populate line 11 with a code E for each partner's portion of the cancellation. I have tried to enter the amount in Other Income sections but it doesn't appear on Line 11.

How do I get this into the form? 

0 1 1948
1 Replies
Expert Alumni
Mar 5, 2024 1:09:43 PM

Yes, you are correct. When a partnership receives Form 1099-C reporting canceled debt, this becomes income passed through to the partners on Schedule K-1.

 

To enter cancelation of debt income in the partnership return, go to Forms:

  1. Open Form 1065 p5-6 
  2. Go to Line 11 G
  3. Enter amount from 1099-C and code E will appear in the small box.
  4. This will be allocated according to ownership percentage and appear on Schedule K-1 Part III Line 11 Code E.

Entering 1099-C under Other Income includes the amount in net income but loses the debt cancellation character.