A 1099-C reports Cancellation of Debt Income (CODI). A lender is supposed to file a 1099-C form if it âcancelsâ $600 or more in debt. It files a copy with the IRS and is required to send a copy to the taxpayer as well.ouâll have to file Form 982 with your tax return to claim this exclusion. If you the amount by which you are insolvent is less than the amount on the 1099-C then you may be able to avoid including part of that amount in your income.