@Mike9241 wrote:
I can offer a suggestion but don't know how the IRS would view this. report the 1099-C
and then as a negative adjustment on the other income schedule enter "less debt cancellation above reported by ex-spouse XXX-XX-XXXX. (or similar wording with their SSN)
Possibly. However, it's too late for that here, and the taxpayer needs to answer the letter. I would not advise this taxpayer filing an amended return to report the debt in the manner you suggest. (Prior to the invention of e-filing, the IRS advice when a 1099 was not taxable, was to leave it off the return and attach a copy of the 1099 and a letter of explanation to the tax return when it was mailed in, but that doesn't work with e-filing.)
