Cancellation Of Debt - COD
In some cases, this debt is from one country to another and is partially or fully wiped away to help rebuild the nation.
If the cancellation of debt is taxable, the debtor will receive a 1099-C at year-end that reports the amount of debt forgiven as taxable income. For example, if a bank lent $10,000 to you and you pay back $6,000, then are unable to pay the remainder, the bank can forgive the $4,000 difference, which will be recorded as income for you.
Cases in which debt forgiveness is not considered income include bankruptcies, insolvencies, certain farm loans and non-recourse loans.
Investment dictionary. Academic. 2012.
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