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Discharge of debt

January 27, 2017 • Anonymous • Log In to Post Comments

We have a client that received a Form 1099-C, for discharge of principal residence indebtedness. The date of identifiable event is shown as 1/1/14; however, documentation received from the client shows that the debt was actually discharged in 2013. The code shown on the 1099-C is code I, indicating that the discharge occurred before the identifiable event.

We originally filed the 2014 return showing the discharge as taxable for California, since this was the first tax year in which California did not conform to the Federal exclusion. However, if the discharge in fact occurred in 2013, despite the date on the Form 1099-C, can the 2014 return be amended to leave this out entirely? Is there specific documentation that needs to be included as an attachment to the amended return to show that the discharge in fact occurred in 2013?

Thank you.


Yes You can amend the return. Most likely the FTB will audit it but if you can show the discharge was in 2013 you should win.


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