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1099C With a Co-Signer?

Is it ok to only claim 50% of the amount reported on a 1099C Cancellation of Debt if there was a co-signer on the loan that resulted in a cancellation of debt.  

2 Replies
Opus 17
Level 15

1099C With a Co-Signer?

You received the money originally, you never paid it back, therefore it is your taxable income now. It would never be taxable income to the cosigner unless the cosigner received half the money in the beginning.  

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
Level 15

1099C With a Co-Signer?

The purpose of a co-signer is to obtain the loan.   If you fail to pay the loan then the lender can go after the co-signer for the payments.   Since it seems that the lender has not done that and is forgiving (canceling) the debt, the co-signer is no longer involved at all.    They are canceling *your* debt, not the co-signers debt.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
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