1099-C for deceased filer

[ldh878]

I'm administrator for the estate of a taxpayer who died in May 2019.  I just got word that a creditor will cancel an outstanding debt and issue an IRS Form 1099-C later this year.  Question is, will this be taxable income for the decedent or for the estate?  The debt dates from 2012. 

[Anonymous · Accepted solution]

If a debt of a taxpayer is canceled after the death of the taxpayer, the cancellation of debt (COD) income is income to the estate or the non-grantor trust of the decedent and reportable as income on the 1041 return for the estate or non-grantor trust (Reg. 1.108-9(c)(2)) to the extent the estate or non-grantor trust is solvent.

The Code Sec 108(a)(1)(B) insolvency exclusion applies to estates and non-grantor trusts just as it applies to individuals, so the COD income is only taxable to the extent the estate or non-grantor trust is solvent and would be reportable on the 1041 return.

if cancelled before death, then it goes on form 1040   the same code section applies to the individual so it is only taxable to the extent the taxpayer is solvent.     the executor can use form 982 to reduce certain tax attributes to reduce the amount on the 1099C that would be taxed

[ldh878]

Thank you.  That's very helpful.

[MLW33]

My spouse passed away in 2018 (while we were separated, but still legally married), and I just got a 1099-C with code G for him.  Do I add this to my return? 

[ThomasM125]

No, you shouldn't add that to your return, assuming it doesn't have your social security number on it. It is not your income.

[Blue12ashes]

I received a 2019 1099c for my deceased father who passed in 2017. Since it’s reported under his SSN do I need to include it on my mother’s 2019 tax return?  I tried it & It doesn’t affect her either way as she makes very little in SS benefits..

or should I file one for my dad?

it was credit card debt. Thanks!

[AmyC]

If the 1099-C only has your dad's social security number, then it does not belong on your mother's return. It would belong to the estate's return. Please see IRS Estate Tax to determine if you need to file.

@Blue12ashes