Since the 1099-C was issued to your business, the amount of debt cancelled should be reported on Schedule C, line 6. [Pub. 4681 - Canceled Debts, Foreclosures, Repossessions, and Abandonments]
To do this please follow these steps:
- Click on the Business tab > Continue > I'll choose what I work on
- On the Let's gather your [business] info screen, click the Start/Update button next to Business Income and Expenses.
- On the screen, Let’s gather your business info, in the Business Income and Expenses (Schedule C) section, click the Start/Update button.
- Continue to the Here's the business info we have so far screen. Click on the Edit box next to the business.
- On the Your [XX] Business screen, click the Update box next to Business Income.
- Click the Start/Update box next to Other Income.
- On the Other Income screen, enter "cancellation of debt" in the Description box and the Amount. Click Continue.
- The amount will flow to line 6 of your Schedule C.
Be sure to delete the Cancellation of Debt Form 1099-C you entered. To do this:
- Go into Forms Mode by clicking on the Forms icon in the top right of the blue bar.
- In the Forms in My Return list on the left, click on Form 1099-C. It will open on the screen on the right.
- Click on the Delete Form box at the bottom of the screen.
- To return to the interview, click on the Step-By-Step icon in the top right of the blue bar.
