IRS written determination 201543004

Private letter rulings and published taxpayer determination letters. Native document type is retained separately; a determination letter is not labeled a private letter ruling. These taxpayer-specific releases cannot be used or cited as precedent under 26 USC 6110(k)(3); applicability and current legal force are not independently certified. Keep repeated UILC subjects attached to one actual numbered document.

Internal Revenue Service
Department of the Treasury
Washington, DC 20224
Number: 201543004
Release Date: 10/23/2015
6050P.00-00
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Third Party Communication: None
Date of Communication: Not Applicable
Person To Contact:
----------------------, ID No. ------------------
Telephone Number:
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Refer Reply To:
CC:PA:02
PLR-103304-15
Date:
July 27, 2015
Legend
Entity = --------------------------
State X = --------------
Asset = -------------------
Collection Remedy = ----------------------------------------------------------------------------------------
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State Law X = -------------------------------------------------------------------------------------------------
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Notices = -----------------------------------------------------------------
Month = ----------
Year 1 = -------
Dear -------------------:
This letter responds to the letter dated January 7, 2015, submitted on behalf of Entity
requesting a ruling that Entity is not required to file Forms 1099-C to report the write-off
of certain balances under a settlement agreement and court order approving the
settlement agreement because the discharge was not the result of an “identifiable

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event” listed in Treasury Regulation § 1.6050P-1(b)(2), but rather was required by
operation of state law. For the reasons set forth below, we conclude that Entity is
required to report the discharge of indebtedness because of the occurrence of an
identifiable event listed in Treasury Regulation section 1.6050P-1(b)(2).
Facts
Entity is a financial institution chartered in State X engaged in, among other things,
purchasing conditional sales contracts entered into in State X by buyers and sellers of
Assets that are subject to State Law X. Some of these contracts went into default and
Entity pursued Collection Remedy. Plaintiff filed a class action lawsuit against Entity,
alleging Entity’s Notices violated State Law X, and seeking statutory damages and an
injunction prohibiting Entity from collecting theoutstanding deficiency balances from the
class of debtors who received similar Notices.
Entity and plaintiffs signed an agreement in Month of Year 1. Pursuant to a settlement
agreement, Entity will waive and extinguish the balances owed by the class members.
Entity will also acknowledge that the Notices sent to class members did not meet
statutory standards and admit that State X law bars entity from collecting deficiency
balances.
Law & Analysis
Section 6050P of the Internal Revenue Code requires that an applicable entity report
any discharge (in whole or in part) of indebtedness of any person in excess of $600 on
a Form 1099-C. The Form 1099-C is to include the name, address and taxpayer
identification number of the person whose indebtedness is discharged, the date of the
discharge and the amount of indebtedness discharged. Section 1.6050P-1(a)(1) of the
Treasury Regulations provides that, for information reporting purposes, a discharge of
indebtedness is deemed to have occurred upon the occurrence of an “identifiable
event”, whether or not an actual discharge of indebtedness has occurred on or before
the date on which the identifiable event has occurred. Section 1.6050P-1(b)(2) provides
a list of identifiable events. There is a reporting requirement upon the occurrence of
one of these identifiable events even if the identifiable event did not cause the
discharge. Of the identifiable events, two are particularly relevant to the requested
ruling: agreement by the parties to discharge the debt for less than full consideration or
a decision by the creditor to discontinue collection activity and discharge the debt.
Discharge by agreement of the parties
Treasury Regulation section 1.6050P-1(b)(2)(F) provides that an identifiable event
occurs when the applicable entity and debtor agree to discharge the indebtedness for
less than full consideration. Here, pursuant to the settlement agreement between

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Entity and the class members, Entity will discharge the class members’ remaining
indebtedness for less than full consideration. Entity is required to report the discharges
of the class members’ indebtedness because there is an agreement between the
creditor and the debtor to discharge indebtedness for less than full consideration.
Discharge by decision of the creditor
Treasury Regulation section 1.6050P-1(b)(2)(G) provides that a discharge of
indebtedness occurs upon a decision by the creditor, or the application of a defined
policy of the creditor, to discontinue collection activity and discharge debt. Because the
identifiable event listed in Treasury Regulation section 1.6050P-1(b)(2)(F) occurred,
reporting is required without a need for further analysis.
Conclusion
Based solely on the information provided and representations made, we conclude that
Entity is required to file Forms 1099-C with respect to waiving and extinguishing the
class members’ deficiency balances pursuant to the settlement agreement and
preliminary order because the identifiable event described in section 1.6050P-1(b)(2)(F)
occurred.
Except as expressly provided herein, no opinion is expressed or implied concerning the
tax consequences of any aspect of any transaction or item discussed or referenced in
this letter.
This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) of the Code
provides that it may not be used or cited as precedent.
In accordance with the Power of Attorney on file with this office, a copy of this letter is
being sent to your authorized representatives.

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The ruling contained in this letter are based upon information and representations
submitted by the taxpayer and accompanied by a penalty of perjury statement executed
by an appropriate party. While this office has not verified any of the material submitted
in support of the request for rulings, it is subject to verification on examination.
Sincerely,
Blaise Dusenberry
Senior Technician Reviewer
(Procedure & Administration)
Enclosures: (1) Copy of letter for section 6110 purposes
(2) Notice of Intention to Disclose, Notice 437