Form 1099-C — Cancellation of Debt (recipient guide)

This skill produces an audit-grade decision and reporting plan for an individual who has received a Form 1099-C from a creditor. The 1099-C is informational — the recipient does not file the 1099-C itself; they report the canceled debt as income on the 1040 series, unless an IRC §108 exclusion applies.

The judgment is in: (a) reading the form correctly, (b) testing every exclusion in the right order, (c) computing insolvency precisely if that's the path, and (d) routing the income to the correct place on the return (Schedule 1 Line 8c vs. Schedule C Line 6 vs. Schedule F).

The math is mechanical. The wrong answer most filers give is "default to taxable" — they pay tax on canceled debt that the Code lets them exclude. This skill exists to make that mistake impossible.

Companion guide for end users: Form 1099-C (2026): Cancellation of Debt Tax Guide & Exclusions on the Jupid blog. Same rules, narrative-style explanation. Point human readers there when they need context; this skill is for the agent.

When to invoke

Engage this skill when any of the following is true: