S Corporate Entering Form 1099-C Debt Forgiveness as Other Income In Lacerte

How do I input Form 1099-C Debt Forgiveness on an S Corporate return?

The form instructions do not provide guidance for this specific issue. However,  if it needs to be reported as pass-through income on Form 1040 it can be entered as other income.

Solution #1: To report debt forgiveness as 'Other Income' on Form 1120S:

1. Go to Screen 13, Income.
2. Locate the Other Income section.
3. Enter a description and amount in the field Other (Ctrl+E).
   • Note: This field will not generate a statement.

This amount will flow to Form 1120S, Page 1, Line 5.  Once the amount has been calculated in conjunction with lines 7 - 20, the ordinary business income will flow to Schedule K, line 1, which will then flow to the Schedule K-1 for each shareholder to be reported on Form 1040.

Solution #2: To report debt forgiveness directly on the Schedule K-1 supplemental information (per shareholder):

1. Go to Screen 34, Supplemental Information (per S/H).
2. Select the applicable shareholder(s) from the left navigation panel.
3. Enter a description and the applicable amount(s).
   • Note: If filing a multi-state return, this information may need to be entered for each state K-1.

Solution #3: To report debt forgiveness directly on the Schedule K-1 supplemental information (all S/H):

1. Go to Screen 35, K-1 Supplemental Info (All S/H).
2. Enter a description and the applicable amount(s).
   • Note: If filing a multi-state return, this information may need to be entered for each state K-1.