My personal take on this is that borrowers who receive this form for “forgiveness of debt” should probably send a letter or form of contest to the IRS stating the objection to the filing of the 1099-C. The objection or contest should state, in most cases, that this has been filed by a party who had no right, title or interest in the loan and that the form is not indicative of any final resolution of the debt, which is owned by third parties unrelated to the filer.
One of my favorite legal research firms just published a short blurb on the subject:
The Lawletter Vol 43 No 7 Charlene Hicks—Senior Attorney, National Legal Research Group
To date, no consensus has been reached among courts throughout the United States on the question as to whether a creditor’s issuance of an IRS Form 1099-C results in the extinguishment of the reported…
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