Form 1065-Where to Enter Cancelation of Debt From 1099-C
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When a partnership receives Form 1099-C evincing canceled debt, this becomes income passed through to the partners on Schedule K.
To enter cancelation of debt income in the partnership return, from the Main Menu of the tax return (Form 1065) select:
- Schedule K - Distributive Share Items
- Income (Loss)
- Other Income (Loss)
- Cancellation of debt - Enter the amount of debt that was canceled.
This income will flow to each partner's Schedule K-1 Box 11 with code E.
Additional Information: