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Do I report it if I received a 1099-C for cancellation of a debt by a timeshare company. Line 2, amount of debt discharged says $0.00! FMV says $15,554.62.

I tried adding a 1099-C in turbotax, and it did not show up after I entered $0.00 as instructed for lines 2 and 3.
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3 Replies
MonikaK1
Employee Tax Expert

Do I report it if I received a 1099-C for cancellation of a debt by a timeshare company. Line 2, amount of debt discharged says $0.00! FMV says $15,554.62.

If no debt was discharged, and the form you received only shows the fair market value of a timeshare property that you relinquished, then you don't need to report it on your return.

If, as is usually the case, the timeshare was a personal use property, there is no deductible capital loss to report.

 

See this tax tips article for more information about cancellation of debt.

 

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Do I report it if I received a 1099-C for cancellation of a debt by a timeshare company. Line 2, amount of debt discharged says $0.00! FMV says $15,554.62.

Thanks very much for this info. Now it makes me wonder if my 2011 tax return included this provision. I had gotten divorced and ex got one house and I got the other one. Ex didn’t pay a dime of the mortgage for his house (it was mortgaged in my name only). I had to take him back to court and got that house legally deeded back to me so I could sell it. Had to sell at a $40k loss. I do remember getting a 1099-C from the mortgage company that year. Now I’ll have to go back and check if I paid any taxes on it. It’s been long enough I’m not sure I’d be entitled to recover any money if I did pay taxes on it. 

MonikaK1
Employee Tax Expert

Do I report it if I received a 1099-C for cancellation of a debt by a timeshare company. Line 2, amount of debt discharged says $0.00! FMV says $15,554.62.

If the 1099-C you received in the earlier year had an amount in Box 2, that amount could have been taxable.  However, the Mortgage Forgiveness Debt Relief Act of 2007 (see this IRS article) generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualify for this relief.

 

Cancellation of qualified principal residence indebtedness that is discharged before January 1, 2026, or discharged subject to an arrangement that is entered into and evidenced in writing before January 1, 2026, is excluded from gross income.

 

See IRS Tax Topic 431 for more information.

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