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If 3 people receive a 1099C (cancellation of debt) all for…

If 3 people receive a...
If 3 people receive a 1099C (cancellation of debt) all for the full amount, do all 3 people have to report the full amount?That seems wrong...
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4/14/2017
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 31,299
Experience: Taxes, Immigration, Labor Relations
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See here

https://www.law.cornell.edu/cfr/text/26/1.6050P-1

(e)(1)(ii) Amount to be reported.

In the case of multiple debtors jointly and severally liable on an indebtedness, the amount of discharged indebtedness required to be reported under this section with respect to each debtor is the total amount of indebtedness discharged. For this purpose, multiple debtors are presumed to be jointly and severally liable on an indebtedness in the absence of clear and convincing evidence to the contrary.

.

So far - reporting is correct.

If that COD amount is included into taxable income - it should be allocated to each debtor.

Attach a note regarding allocation and reasoning if the allocation in not in equal amounts.

If COD income is excluded from taxable income - each debtor must separately be eligible for the exclusion of the entire amount.

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Lev
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