My suggestion is to report it and then cancel out the income. Be sure you report the fraud to the proper authorities and save the police reports in case if this triggers an IRS examination.
- Log into your account
- Select Wages and income
- Less Common income
- Miscellaneous Income, 1099-A, 1099>start
- Go to cancellation of debt.
- Enter the 1099C details
- After you entered, you will be taken back to the miscellaneous income section
- Select other reportable income
- Other taxable income, answer yes
- Under brief description, call it " 1099-C income excludable due to Fraud and then enter the amount of 1099 C with a negative sign in front of it. (Ex: -xxxx.xx)
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