Acquisition or Abandonment of Secured Property

2012

Department of the Treasury
Internal Revenue Service

Instructions for Forms
1099-A and 1099-C
Section references are to the Internal Revenue Code unless
otherwise noted.

What’s New

outside the United States and the borrower has furnished the lender a
statement, under penalties of perjury, that the borrower is an exempt
foreign person (unless the lender knows that the statement is false).

Who Must File

Truncating borrower/debtor identification number on paper payee
statements. Notice 2011-38 allows filers of Forms 1099-A and 1099-C
to truncate a borrower’s (Form 1099-A) or debtor’s (Form 1099-C)
identification number (social security number (SSN), individual taxpayer
identification number (ITIN), or adoption taxpayer identification number
(ATIN)) on paper payee statements for tax years 2011 and 2012. See
part M in the 2012 General Instructions for Certain Information Returns.
Form 1099-C box changes. The titles for boxes 1, 2, and 6 on Form
1099-C have changed. Box 1 is now Date of Identifiable Event; box 2 is
now Amount of Debt Discharged; and box 6 is now Identifiable Event
Code, and requires the entry of a code for the identifiable event. See
Box 6 — Identifiable Event Code. For 2012, all codes are optional
except for Code A — Bankruptcy.

Reminder
In addition to these specific instructions, you should also use the 2012
General Instructions for Certain Information Returns (Forms 1097,
1098, 1099, 3921, 3922, 5498, and W-2G). Those general instructions
include information about the following topics.
• Backup withholding.
• Electronic reporting requirements.
• Penalties.
• Who must file (nominee/middleman).
• When and where to file.
• Taxpayer identification numbers.
• Statements to recipients.
• Corrected and void returns.
• Other general topics.
You can get the general instructions from IRS.gov or by calling
1-800-TAX-FORM (1-800-829-3676).
Future developments. The IRS has created pages on IRS.gov for
information about Forms 1099-A and 1099-C and their instructions, at
www.irs.gov/form1099a and www.irs.gov/form1099c. Information about
any recent developments affecting Forms 1099-A or 1099-C and their
instructions (such as legislation enacted after we release them) will be
posted on these pages.

Specific Instructions for Form 1099-A
File Form 1099-A, Acquisition or Abandonment of Secured Property, for
each borrower if you lend money in connection with your trade or
business and, in full or partial satisfaction of the debt, you acquire an
interest in property that is security for the debt, or you have reason to
know that the property has been abandoned. You need not be in the
business of lending money to be subject to this reporting requirement.

Coordination With Form 1099-C
If, in the same calendar year, you cancel a debt in connection with a
foreclosure or abandonment of secured property, it is not necessary to
file both Form 1099-A and Form 1099-C, Cancellation of Debt, for the
same debtor. You may file Form 1099-C only. You will meet your Form
1099-A filing requirement for the debtor by completing boxes 4, 5, and 7
on Form 1099-C. However, if you file both Forms 1099-A and 1099-C,
do not complete boxes 4, 5, or 7 on Form 1099-C. See the instructions
for Form 1099-C, later.

Property
Property means any real property (such as a personal residence), any
intangible property, and tangible personal property except:
• No reporting is required for tangible personal property (such as a car)
held only for personal use. However, you must file Form 1099-A if the
property is totally or partly held for use in a trade or business or for
investment.
Jul 06, 2012

• No reporting is required if the property securing the loan is located

In addition to the general rule specified above, the following
rules apply.
Multiple owners of a single loan. If there are multiple owners of
undivided interests in a single loan, such as in pools, fixed investment
trusts, or other similar arrangements, the trustee, record owner, or
person acting in a similar capacity must file Form 1099-A on behalf of
all the owners of beneficial interests or participations. In this case, only
one form for each borrower must be filed on behalf of all owners with
respect to the loan. Similarly, for bond issues, only the trustee or similar
person is required to report.
Governmental unit. A governmental unit, or any of its subsidiary
agencies, that lends money secured by property must file Form 1099-A.
Subsequent holder. A subsequent holder of a loan is treated as a
lender and is required to report events occurring after the loan is
transferred to the new holder.
Multiple lenders. If more than one person lends money secured by
property and one lender forecloses or otherwise acquires an interest in
the property and the sale or other acquisition terminates, reduces, or
otherwise impairs the other lenders’ security interests in the property,
the other lenders must file Form 1099-A for each of their loans. For
example, if a first trust holder forecloses on a building, and the second
trust holder knows or has reason to know of such foreclosure, the
second trust holder must file Form 1099-A for the second trust even
though no part of the second trust was satisfied by the proceeds of the
foreclosure sale.

Abandonment
An abandonment occurs when the objective facts and circumstances
indicate that the borrower intended to and has permanently discarded
the property from use. You have “reason to know” of an abandonment
based on all the facts and circumstances concerning the status of the
property. You will be deemed to know all the information that would
have been discovered through a reasonable inquiry when, in the
ordinary course of business, you become aware or should become
aware of circumstances indicating that the property has been
abandoned. If you expect to commence a foreclosure, execution, or
similar sale within 3 months of the date you had reason to know that the
property was abandoned, reporting is required as of the date you
acquire an interest in the property or a third party purchases the
property at such sale. If you expect to but do not commence such action
within 3 months, the reporting requirement arises at the end of the
3-month period.

Statements to Borrowers
If you are required to file Form 1099-A, you must provide a statement to
the borrower. Furnish a copy of Form 1099-A or an acceptable
substitute statement to each borrower. For more information about the
requirement to furnish a statement to the borrower, see part M in the
2012 General Instructions for Certain Information Returns.

Account Number
The account number is required if you have multiple accounts for a
borrower for whom you are filing more than one Form 1099-A.
Additionally, the IRS encourages you to designate an account number
for all Forms 1099-A that you file. See part L in the 2012 General
Instructions for Certain Information Returns.

Box 1. Date of Lender’s Acquisition or Knowledge of
Abandonment
For an acquisition, enter the date you acquired the secured property. An
interest in the property generally is acquired on the earlier of the date
title is transferred to the lender or the date possession and the burdens
and benefits of ownership are transferred to the lender. If an objection
period is provided by law, use the date the objection period expires. If

Cat. No. 27991U

you purchase the property at a sale held to satisfy the debt, such as at
a foreclosure or execution sale, use the later of the date of sale or the
date the borrower’s right of redemption, if any, expires.
For an abandonment, enter the date you knew or had reason to
know that the property was abandoned unless you expect to commence
a foreclosure, execution, or similar action within 3 months, as explained
earlier. If a third party purchases the property at a foreclosure,
execution, or similar sale, the property is treated as abandoned, and
you have reason to know of its abandonment on the date of sale.

Who Must File
File Form 1099-C if you are:
1. A financial institution described in section 581 or 591(a) (such as
a domestic bank, trust company, building and loan or savings and loan
association).
2. A credit union.
3. Any of the following, its successor, or subunit of one of the
following:
a. Federal Deposit Insurance Corporation,
b. Resolution Trust Corporation,
c. National Credit Union Administration,
d. Any other federal executive agency, including government
corporations,
e. Any military department,
f. U.S. Postal Service, or
g. Postal Rate Commission.
4. A corporation that is a subsidiary of a financial institution or credit
union, but only if, because of your affiliation, you are subject to
supervision and examination by a federal or state regulatory agency.
5. A Federal Government agency including:
a. A department,
b. An agency,
c. A court or court administrative office, or
d. An instrumentality in the judicial or legislative branch of the
government.
6. Any organization whose significant trade or business is the
lending of money, such as a finance company or credit card company
(whether or not affiliated with a financial institution). The lending of
money is a significant trade or business if money is lent on a regular
and continuing basis. Regulations section 1.6050P-2(b) lists three safe
harbors under which reporting may not be required for the current year.
See Safe harbor rules next.

Box 2. Balance of Principal Outstanding
Enter the balance of the debt outstanding at the time the interest in the
property was acquired or on the date you first knew or had reason to
know that the property was abandoned. Include only unpaid principal on
the original debt. Do not include accrued interest or foreclosure costs.

Box 3. Reserved
Box 4. Fair Market Value (FMV) of Property
For a foreclosure, execution, or similar sale, enter the FMV of the
property. See Temporary Regulations section 1.6050J-1T, Q/A-32.
Generally, the gross foreclosure bid price is considered to be the FMV.
If an abandonment or voluntary conveyance to the lender in lieu of
foreclosure occurred and you placed an “X” in the checkbox in box 5,
enter the appraised value of the property. Otherwise, make no entry in
this box.

Box 5. Was Borrower Personally Liable for
Repayment of the Debt
If the borrower was personally liable for repayment of the debt at the
time the debt was created or, if modified, at the time of the last
modification, enter an “X” in the checkbox.

Box 6. Description of Property

Safe harbor rules. The three safe harbor rules in which an entity will
not be considered to have a significant trade or business of lending
money are:
1. No prior year reporting required. An organization will not have a
significant trade or business of lending money for the current year if the
organization was not required to report in the prior year and if its gross
income from lending money in the most recent test year (see item 3
below) is less than both 15% of the organization’s gross income and $5
million.
2. Prior year reporting requirement. An organization that had a prior
year reporting requirement will not have a significant trade or business
of lending money for the current year if, for each of the 3 most recent
test years, its gross income from lending money is less than both 10%
of the organization’s gross income and $3 million.
3. No test year. Newly formed organizations are considered not to
have a significant trade or business of lending money even if the
organization lends money on a regular and continuing basis. However,
this safe harbor does not apply to an entity formed or availed of for the
principal purpose of holding loans acquired or originated by another
entity. In this instance, the transferee entity (including real estate
mortgage investment conduits (REMICs) and pass-through securitized
indebtedness arrangements) may be required to report cancellation of
indebtedness on Form 1099-C. See Regulations section
1.6050P-1(e)(5).

Enter a general description of the property. For real property, generally
you must enter the address of the property, or, if the address does not
sufficiently identify the property, enter the section, lot, and block.
For personal property, enter the applicable type, make, and model.
For example, describe a car as “Car — 2008 Honda Accord.” Use a
category such as “Office Equipment” to describe more than one piece of
personal property, such as six desks and seven computers. Enter
“CCC” for crops forfeited on Commodity Credit Corporation loans.

Specific Instructions for Form 1099-C
The creditor’s phone number must be provided in the creditor’s
information box. It should be a central number for all canceled
CAUTION debts at which a person may be reached who will insure the
debtor is connected with the correct department.

!
!

CAUTION

Do not file Form 1099-C when fraudulent debt is canceled due
to identity theft. Form 1099-C is to be used only for cancellations
of debts for which the debtor actually incurred the underlying

debt.
File Form 1099-C, Cancellation of Debt, for each debtor for whom
you canceled a debt owed to you of $600 or more if:
1. You are an entity described under Who Must File , below, and
2. An identifiable event has occurred. It does not matter whether
the actual cancellation is on or before the date of the identifiable event.
See When Is a Debt Canceled, later.

!

Test year defined. A test year is a tax year of the organization that
ends before July 1 of the previous calendar year. For example, X, a
calendar year taxpayer who has a significant trade or business of
lending money, is formed in year one. X will not have a test year in year
one or year two. However, for year three, X’s test year will be year one.
In year three, year one is the only year that ended before July 1 of the
previous calendar year (in this example, year two).
Penalties. There are penalties for failure to file correct information
returns by the due date and for failure to furnish correct payee
statements. See part O in the 2012 General Instructions for Certain
Information Returns for details.
Exceptions. Until further guidance is issued, no penalty will apply
for failure to file Form 1099-C, or provide statements to debtors, for
amounts:
• Discharged in nonlending transactions, or
• Forgiven pursuant to the terms of a debt obligation.
Multiple creditors. If a debt is owned (or treated as owned for federal
income tax purposes) by more than one creditor, each creditor that is
described under Who Must File, earlier, must issue a Form 1099-C if
that creditor’s part of the canceled debt is $600 or more. A creditor will
be deemed to have met its filing requirements if a lead bank, fund
administrator, or other designee of the creditor complies on its behalf.
The designee may file a single Form 1099-C reporting the aggregate
canceled debt or may file Form 1099-C for that creditor’s part of the

Form 1099-C must be filed regardless of whether the debtor is
required to report the debt as income.

CAUTION

The debtor may be an individual, corporation, partnership, trust,
estate, association, or company.
Do not combine multiple cancellations of a debt to determine
whether you meet the $600 reporting requirement unless the separate
cancellations are under a plan to evade the Form 1099-C requirements.

Coordination With Form 1099-A
If, in the same calendar year, you cancel a debt of $600 or more in
connection with a foreclosure or abandonment of secured property, it is
not necessary to file both Form 1099-A, Acquisition or Abandonment of
Secured Property, and Form 1099-C for the same debtor. You may file
Form 1099-C only. You will meet your Form 1099-A filing requirement
for the debtor by completing boxes 4, 5, and 7 on Form 1099-C.
However, you may file both Forms 1099-A and 1099-C; if you do file
both forms, do not complete boxes 4, 5, or 7 on Form 1099-C. See the
instructions for Form 1099-A, earlier, and Box 4, Box 5, and Box 7,
later.

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Instructions for Forms 1099-A and 1099-C (2012)

canceled debt. Use any reasonable method to determine the amount of
each creditor’s part of the canceled debt.

a. The creditor (or a third party collection agency on behalf of the
creditor) has engaged in significant bona fide collection activity during
the 12-month period ending on December 31, or
b. Facts and circumstances that exist on January 31 following the
end of the 36-month period indicate that the debt was not canceled.
Significant bona fide collection activity does not include nominal or
ministerial collection action, such as an automated mailing. Facts and
circumstances indicating that a debt was not canceled include the
existence of a lien relating to the debt (up to the value of the security) or
the sale or packaging for sale of the debt by the creditor.
9. Other actual discharge before identifiable event. Enter “I” in Box
6 if there is an other actual discharge before one of the identifiable
events listed above.

Debt owned by a partnership is treated as owned by the partners
and must follow the rules for multiple creditors.
Pass-throughs and REMICs. Until further guidance is issued, no
penalty will apply for failure to file Form 1099-C, or provide statements
to debtors, for a canceled debt held in a pass-through securitized debt
arrangement or held by a REMIC. However, see item 3 under Safe
harbor rules, earlier.
A pass-through securitized debt arrangement is any arrangement in
which one or more debts are pooled and held for 20 or more persons
whose interests in the debt are undivided co-ownership interests that
are freely transferable. Co-ownership interests that are actively traded
personal property (as defined in Regulations section 1.1092(d)-1) are
presumed to meet these requirements.

Exceptions
You are not required to report on Form 1099-C the following.
1. Certain bankruptcies. You are not required to report a debt
discharged in bankruptcy unless you know from information included in
your books and records that the debt was incurred for business or
investment purposes. If you are required to report a business or
investment debt discharged in bankruptcy, report it for the later of:
a. The year in which the amount of discharged debt first can be
determined, or
b. The year in which the debt is discharged in bankruptcy.
A debt is incurred for business if it is incurred in connection with the
conduct of any trade or business other than the trade or business of
performing services as an employee. A debt is incurred for investment if
it is incurred to purchase property held for investment (as defined in
section 163(d)(5)).
2. Interest. You are not required to report interest. However, if you
choose to report interest as part of the canceled debt in box 2, you must
show the interest separately in box 3.
3. Nonprincipal amounts. Nonprincipal amounts include penalties,
fines, fees, and administrative costs. For a lending transaction, you are
not required to report any amount other than stated principal. A lending
transaction occurs when a lender loans money to, or makes advances
on behalf of, a borrower (including revolving credit and lines of credit).
For a nonlending transaction, nonprincipal amounts are included in the
debt. However, until further guidance is issued, no penalties will be
imposed for failure to report these amounts in nonlending transactions.
4. Foreign debtors. Until further guidance is issued, no penalty will
apply if a financial institution does not file Form 1099-C for a debt
canceled by its foreign branch or foreign office for a foreign debtor,
provided all the following apply.
a. The financial institution is engaged in the active conduct of a
banking or similar business outside the United States.
b. The branch or office is a permanent place of business that is
regularly maintained, occupied, and used to carry on a banking or
similar financial business.
c. The business is conducted by at least one employee of the
branch or office who is regularly in attendance at the place of business
during normal working hours.
d. The indebtedness is extended outside the United States by the
branch or office in connection with that trade or business.
e. The financial institution does not know or have reason to know
that the debtor is a U.S. person.
5. Related parties. Generally, a creditor is not required to file Form
1099-C for the deemed cancellation of a debt that occurs when the
creditor acquires the debt of a related debtor, becomes related to the
debtor, or transfers the debt to another creditor related to the debtor.
However, if the transfer to a related party by the creditor was for the
purpose of avoiding the Form 1099-C requirements, Form 1099-C is
required. See section 108(e)(4).
6. Release of a debtor. You are not required to file Form 1099-C if
you release one of the debtors on a debt as long as the remaining
debtors are liable for the full unpaid amount.
7. Guarantor or surety. You are not required to file Form 1099-C for
a guarantor or surety. A guarantor is not a debtor for purposes of filing
Form 1099-C even if demand for payment is made to the guarantor.
8. Seller financing. Organizations whose principal trade or business
is the sale of non-financial goods or non-financial services, and who
extend credit to customers in connection with the purchase of those
non-financial goods and non-financial services, are not considered to
have a significant trade or business of lending money, with respect to
the credit extended in connection with the purchase of those goods or
services, for reporting discharge of indebtedness on Form 1099-C. See
Regulations section 1.6050P-2(c). But the reporting applies if a
separate financing subsidiary of the retailer extends the credit to the
retailer’s customers.

Debt Defined
A debt is any amount owed to you, including stated principal, stated
interest, fees, penalties, administrative costs, and fines. The amount of
debt canceled may be all or only part of the total amount owed.
However, for a lending transaction, you are required to report only the
stated principal. See Exceptions, later.

When To File
Generally, file Form 1099-C for the year in which an identifiable event
occurs. See Exceptions, later. If you cancel a debt before an identifiable
event occurs, you may choose to file Form 1099-C for the year of
cancellation. No further reporting is required even if a later identifiable
event occurs with respect to an amount previously reported. Also, you
are not required to file an additional or corrected Form 1099-C if you
receive payment on a prior year debt.

When Is a Debt Canceled
A debt is deemed canceled on the date an identifiable event occurs or,
if earlier, the date of the actual discharge if you choose to file Form
1099-C for the year of cancellation. For 2012, all codes are optional
except for Code A — Bankruptcy. An identifiable event is one of the
following.
1. A discharge in bankruptcy under Title 11 of the U.S. Code. For
information on certain discharges in bankruptcy not required to be
reported, see Exceptions, later. Enter “A” in Box 6 to report this
identifiable event.
2. A cancellation or extinguishment making the debt unenforceable
in a receivership, foreclosure, or similar federal nonbankruptcy or state
court proceeding. Enter “B” in Box 6 to report this identifiable event.
3. A cancellation or extinguishment when the statute of limitations
for collecting the debt expires, or when the statutory period for filing a
claim or beginning a deficiency judgment proceeding expires. Expiration
of the statute of limitations is an identifiable event only when a debtor’s
affirmative statute of limitations defense is upheld in a final judgment or
decision of a court and the appeal period has expired. Enter “C” in Box
6 to report this identifiable event.
4. A cancellation or extinguishment when the creditor elects
foreclosure remedies that by law extinguish or bar the creditor’s right to
collect the debt. This event applies to a mortgage lender or holder who
is barred by local law from pursuing debt collection after a “power of
sale” in the mortgage or deed of trust is exercised. Enter “D” in Box 6 to
report this identifiable event.
5. A cancellation or extinguishment making the debt unenforceable
under a probate or similar proceeding. Enter “E” in Box 6 to report this
identifiable event.
6. A discharge of indebtedness under an agreement between the
creditor and the debtor to cancel the debt at less than full consideration.
Enter “F” in Box 6 to report this identifiable event.
7. A discharge of indebtedness because of a decision or a defined
policy of the creditor to discontinue collection activity and cancel the
debt. A creditor’s defined policy can be in writing or an established
business practice of the creditor. A creditor’s established practice to
stop collection activity and abandon a debt when a particular
nonpayment period expires is a defined policy. Enter “G” in Box 6 to
report this identifiable event.
8. The expiration of non-payment testing period. This applies only
to entities described in numbers 1, 2, 3, or 4 under Who Must File,
earlier. This event occurs when the creditor has not received a payment
on the debt during the testing period. The testing period is a 36-month
period ending on December 31, plus any time when the creditor was
precluded from collection activity by a stay in bankruptcy or similar bar
under state or local law. Enter “H” in Box 6 to report this identifiable
event.
The creditor can rebut the occurrence of this identifiable event if:

Instructions for Forms 1099-A and 1099-C (2012)

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Multiple Debtors

Box 1. Date of Identifiable Event

For debts of $10,000 or more incurred after 1994 that involve debtors
who are jointly and severally liable for the debt, you must report the
entire amount of the canceled debt on each debtor’s Form 1099-C.
Multiple debtors are jointly and severally liable for a debt if there is no
clear and convincing evidence to the contrary. If it can be shown that
joint and several liability does not exist, a Form 1099-C is required for
each debtor for whom you canceled a debt of $600 or more.
For debts incurred before 1995 and for debts of less than $10,000
incurred after 1994, you must file Form 1099-C only for the primary (or
first-named) debtor.
If you know or have reason to know that the multiple debtors were
husband and wife who were living at the same address when the debt
was incurred, and you have no information that these circumstances
have changed, you may file only one Form 1099-C.

Enter the date of the identifiable event. See When Is a Debt Canceled,
earlier. However, if you actually cancel a debt before an identifiable
event and you choose to report that cancellation, enter the date that you
actually canceled the debt.

Recordkeeping

Box 4. Debt Description

Box 2. Amount of Debt Discharged
Enter the amount of the canceled debt. See Debt Defined and
Exceptions, earlier. Do not include any amount the lender receives in
satisfaction of the debt by means of a settlement agreement,
foreclosure sale, etc.

Box 3. Interest if Included in Box 2
Enter any interest you included in the canceled debt in box 2. You are
not required to report interest in box 2. But if you do, you must also
report it in box 3.

If you are required to file Form 1099-C, you must retain a copy of that
form or be able to reconstruct the data for at least 4 years from the due
date of the return.

Enter a description of the origin of the debt, such as student loan,
mortgage, or credit card expenditure. Be as specific as possible. If you
are filing a combined Form 1099-C and 1099-A, include a description of
the property.

Requesting TINs

Box 5. Check Here if the Debtor was Personally
Liable for Repayment of the Debt

You must make a reasonable effort to obtain the correct name and
taxpayer identification number (TIN) of the person whose debt was
canceled. You may obtain the TIN when the debt is incurred. If you do
not obtain the TIN before the debt is canceled, you must request the
debtor’s TIN. Your request must clearly notify the debtor that the IRS
requires the debtor to furnish its TIN and that failure to furnish such TIN
subjects the debtor to a $50 penalty imposed by the IRS. You may use
Form W-9, Request for Taxpayer Identification Number and
Certification, to request the TIN. However, a debtor is not required to
certify his or her TIN under penalties of perjury.

If the debtor was personally liable for repayment of the debt at the time
the debt was created or, if modified, at the time of the last modification,
enter an “X” in the checkbox.

Box 6. Identifiable Event Code
Enter the appropriate code to report the nature of the identifiable event.
For more information about each identifiable event, see When Is a Debt
Canceled, earlier, and Regulations section 1.6050P-1(b)(2). Also see
Publication 4681, Canceled Debts, Foreclosures, Repossessions, and
Abandonments.
If you actually canceled the debt before an identifiable event
occurred and choose to report that cancellation, then enter “I” in box 6.

Statements to Debtors
If you are required to file Form 1099-C, you must provide a statement to
the debtor. Furnish a copy of Form 1099-C or an acceptable substitute
statement to each debtor. In the 2012 General Instructions for Certain
Information Returns, see:
• Part M for more information about the requirement to furnish a
statement to the debtor, and
• Part J for specific procedures to complete Form 1099-C for debtors in
bankruptcy.

!

For 2012, all codes are optional except for Code
A — Bankruptcy.

CAUTION

Box 7. Fair Market Value (FMV) of Property

Account Number

If you are filing a combined Form 1099-C and 1099-A for a foreclosure,
execution, or similar sale, enter the FMV of the property. Generally, the
gross foreclosure bid price is considered to be the FMV. If an
abandonment or voluntary conveyance to the lender in lieu of
foreclosure occurred, enter the appraised value of the property.

The account number is required if you have multiple accounts for a
debtor for whom you are filing more than one Form 1099-C.
Additionally, the IRS encourages you to designate an account number
for all Forms 1099-C that you file. See part L in the 2012 General
Instructions for Certain Information Returns.

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Instructions for Forms 1099-A and 1099-C (2012)