What Do the 1099-C Identifiable Event Codes Mean?

The 1099-C identifiable event codes are single letters, A through G, that a creditor enters in Box 6 of Form 1099-C to explain the legal or administrative reason the debt was reported as discharged. The code doesn’t decide whether you owe tax on the canceled amount, but it tells you what kind of event happened, which in turn points to the exclusions you may be able to claim.¹

Federal regulations define each event that triggers a creditor’s obligation to file the form when $600 or more of debt is discharged. The letter codes below match the standard events used on the form.¹²

What Each Code Means

Code A: Bankruptcy

The debt was discharged in a case under Title 11 of the U.S. Bankruptcy Code. Debt canceled through a formal bankruptcy is generally excluded from gross income, though claiming that exclusion usually requires reducing other tax attributes.³

Code B: Other Judicial Debt Relief

The cancellation came through a court proceeding other than bankruptcy — a receivership, for example, or a foreclosure action in which a court rendered the debt legally unenforceable.

Code C: Statute of Limitations or Expiration of Deficiency Period

The legal time limit for collecting the debt ran out. For this code to trigger a reporting duty, the debtor’s statute-of-limitations defense typically has to be upheld in a final, unappealable court judgment. It also covers cases where the window for a creditor to seek a deficiency judgment has closed.

Code D: Foreclosure Election

The creditor chose a foreclosure remedy that, by statute, ends any right to pursue the unpaid balance. Once that election is made, the creditor is barred from coming after the debtor for the remaining amount after the property is sold.

Code E: Debt Relief from Probate or Similar Proceeding

The debt became unenforceable through a probate court or a similar legal process. This usually shows up when a deceased person’s estate is being settled and there aren’t enough assets to cover what was owed.

Code F: By Agreement

The creditor and debtor reached a formal agreement to discharge some or all of the balance. Debt settlements, in which the lender accepts less than the full amount, and short sales of real property are the common examples.

Code G: Decision or Policy to Discontinue Collection

The creditor made an internal decision, or followed a standing business policy, to stop collection and write the debt off. Older consumer balances such as unpaid credit card debt often produce a Code G form when the lender decides further collection isn’t worthwhile.

Does the Code Decide Whether You Owe Tax?

Not directly. Under federal law, gross income generally includes income from the discharge of indebtedness, so the amount in Box 2 is presumptively taxable regardless of which letter appears in Box 6.⁴ Whether you actually owe tax depends on whether you qualify for an exclusion, and the code tells you where to start looking.⁵

Code A lines up directly with the Title 11 bankruptcy exclusion. If the debt was discharged in a qualifying bankruptcy case, it is excluded from gross income, though you’ll generally have to reduce tax attributes such as net operating losses, general business credits, minimum tax credits, capital loss carryovers, or the basis of your property in a specific order set by statute.³

Codes D and F often involve real estate or settled consumer debt, and any code can appear alongside insolvency. A taxpayer is insolvent if total liabilities exceed the fair market value of all assets immediately before the cancellation. When that’s the case, canceled debt can be excluded up to the amount of the insolvency.³

If the canceled debt was used to buy, build, or substantially improve your main home, the qualified principal residence indebtedness exclusion may apply. This one is time-limited: it generally covers debts discharged before January 1, 2026, or those subject to a written agreement entered into before that date.³

Farmers with debt tied to their farming business may qualify for the qualified farm indebtedness exclusion, which has its own rules on the share of income from farming and on the type of lender involved.³

To claim any of these exclusions, you generally file Form 982 with your return, showing the amount excluded and the effect on your other tax items.⁶

One other detail on the form matters for the tax treatment: whether Box 5 shows that you were personally liable for the debt. In foreclosure cases, that box helps determine whether the cancellation is ordinary income or is instead folded into the gain or loss on the sale of the property. The form also breaks out any interest included in the discharged amount; whether that interest is taxable turns on whether you could have deducted it if you had actually paid it.¹³

Ignoring a 1099-C isn’t a workable option. The IRS matches the forms creditors file against the income you report, and a mismatch commonly produces a CP2000 notice proposing additional tax, interest, and possible penalties.⁷⁸ If an exclusion applies, report it on Form 982 rather than leaving the 1099-C off the return.

What a 1099-C Doesn’t Necessarily Mean

Receiving a Form 1099-C doesn’t automatically mean the debt is legally extinguished. Federal regulations treat a discharge as having occurred for reporting purposes when one of the identifiable events happens, whether or not the debt has actually been canceled under contract or state law. A creditor might still try to collect after issuing the form, though such attempts can run into limits under state law or bankruptcy rules.¹ The code in Box 6 tells you what the creditor reported to the IRS. Whether you still owe the underlying debt is a separate question from whether the canceled amount is taxable.

1
Cornell Law School Legal Information Institute. 26 C.F.R. § 1.6050P-1
2
Office of the Law Revision Counsel. 26 U.S.C. § 6050P
3
Office of the Law Revision Counsel. 26 U.S.C. § 108
4
Office of the Law Revision Counsel. 26 U.S.C. § 61
5
IRS. IRS Tax Topic 431 – Canceled Debt – Is It Taxable or Not?
6
IRS. IRS Tax Topic 431 – Canceled Debt – Is It Taxable or Not? – Section: Exclusions from gross income
7
IRS. IRS Tax Topic 652 – Notice of Underreported Income – CP2000
8
IRS. Understanding your CP2000 series notice – Section: Pay or settle any tax due