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Was the amount due to reduction of interest or reduction of principal, loan amount?
Fiona Chen, MPA, Ph.D., CPA, ABV, CFF, CITP
Dear Form 1099,
I called the Chase Military Service Unit to inquire in general. If this is debt forgiven, why did not they use Form 1099-C. I requested a general answer. According to the rep, their payments made or goodwill reduction of payment should be income to the person the 1099 is issued to. These are good will including actual payments made for and to the military service person. It sounds to me that from the accounting's view point, they did not just write off book loss. They probably actually used money or funding from one hand (source) and given to the other. They have actual dollars made. From their perspective, the Misc. income is taxable income.
There is something on if they overcharge interest and made a correction, that reduction is non-taxable.
So, would you please give me a little more information? I will follow up.
So far, I have checked the IRS rules and regulations and publications. I have not read on specifics on this.
The Issue is that this is not a debt forgiven usually on 1099-C. The bank is willing to give for the military service person. I will continue to investigate and get back to you. I read quiet a few other rulings for military personnel but not on this one as tax free or deduction yet.