Leveraging New IRS Rules Eliminating 36-Month Testing Period for Cancellation of Debt Income

Reporting COD Income and Filing 1099-C Under the IRS Proposed Rules

Recording of a 110-minute CPE/CLE webinar with Q&A

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Conducted on Monday, December 15, 2014

Recorded event now available

or call 1-800-926-7926

This course will prepare tax attorneys and CPAs to offer their clients advice on filing federal tax returns and complying with IRS rules for reporting cancellation of debt (COD) income in compliance Sect. 6050P revised regulations for recognizing discharges of debt.


In Oct. 2014, the IRS issued new rules proposed to repeal the requirement for lenders to issue Form 1099-C to borrowers upon the close of a 36-month nonpayment of debt testing period. Federal tax advisors must understand the changes under the new regs to determine when to file Form 1099-C according to the revised requirements. Comments will be accepted until Jan. 13, 2015.

Previous IRS regulations required lenders to issue Form 1099-C to borrowers and the IRS after the conclusion of any 36-month period during which the borrower made no payments. Under the proposed regulations, seven “identifiable events” remain to trigger 1099-C filing, including discharges in bankruptcy, foreclosure or probate, among others.

Both creditors and business entities whose debt has been canceled must understand each of these criteria, as well as the instances when canceled debt is excluded from gross income and real property business indebtedness. Understanding the most recent IRS rules is crucial to ensuring that your clients are taxed on the lowest amount of COD income possible under the law.

Listen as our panel of experienced tax accountants and attorneys delivers a thorough briefing on the regulatory changes under Sect. 6050P for COD income, and cuts through the complexities of the tax law to explain the bottom line on when COD income must be recognized, and which federal forms must be filed by debtors and creditors.



  1. Background
    1. Confusion over 36-month testing period for Form 1099-C
    2. Request for comments from public, IRS response
  2. Details of proposed rules Sect. 6050P
    1. Definition of an identifiable event
    2. What constitutes an identifiable event
    3. Elimination of 36-month testing period
  3. Recognizing and reporting COD income
    1. Form 1099-C, instructions for filing
    2. Exclusions from taxability of COD income
    3. Reporting COD income on federal income tax returns
  4. Tax planning considerations
    1. Strategies for minimizing COD income


The panel will explain how to comply with federal COD income rules and fulfill IRS reporting requirements under the proposed regs, covering topics such as:

  • Examining the impact of proposed Sect. 6050P rules, and when they will take effect.
  • Determining whether an identifiable event has occurred for COD income.
  • Filing Form 1099-C for lenders, and reporting 1099-C data on federal returns for entities with canceled debts on their books.
  • Analyzing when COD income must be included in federal taxable income, or whether an exclusion or other planning opportunity may apply.


Johns, Christopher
Christopher A. Jones

Ballard Spahr

Mr. Jones advises clients on a wide range of federal, state, and local tax matters. His practice includes advising...  |  Read More

Kathleen M. Lach
Kathleen M. Lach

Arnstein & Lehr

Ms. Lach represents both businesses and individuals in income tax, sales tax and penalty controversies, and in IRS...  |  Read More

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