Independent form guide. BrieflyGo is not affiliated with or endorsed by IRS, USCIS, SSA, DOL, or any U.S. government agency. Official forms are sourced from public government websites.
Official form guide
Form 1099-CAP: 1099-CAP
Form 1099‑CAP reports market‑discount amounts that a lender cancelled on a debt. It is filed by the entity that cancelled the debt and must be sent to the IRS and the borrower.
Need help with Form 1099-CAP?
Open it in the AI Editor for field guidance, checks, and PDF export.
Need help? AI Editor guides you through every field of Form 1099-CAP.
Start filling →Form Overview
IRS Form 1099-CAP - 1099-CAP
Form 1099‑CAP reports market‑discount amounts that a lender cancelled on a debt. It is filed by the entity that cancelled the debt and must be sent to the IRS and the borrower.
Risk Radar
Scan points- 1A single typo in the market‑discount amount can trigger a $250 penalty per form.
- 2Leaving Box 1 blank or entering the wrong amount
- 3Failing to send Copy B to the borrower
- 4Using the wrong tax year on the form
- 5Submitting paper after the electronic deadline
Plain English
If a bank forgives part of a loan because the loan’s market value fell, the forgiven market‑discount is taxable. The lender uses Form 1099‑CAP to tell the IRS and the borrower how much of that discount is taxable.
Submission Date
- Filing date: 2025-03-20 22:10:18
- Preparation window: collect IDs, supporting records, and signatures in advance.
- Final review: verify names, dates, and required fields before submission.
AI co-pilot
Fill it faster. Catch mistakes before you file.
What this form is for
- Use when you cancelled market‑discount on a debt.
- Do not use for ordinary debt forgiveness (use Form 1099‑C).
- Check Form 1099‑INT if the discount was treated as interest.
Form selector
Use this form or another form?
Ordinary debt cancellation
Reports total debt forgiven, not just market discount
✓ Verify the cancellation type before filing
Interest earned on a debt
Reports taxable interest, not market discount
✓ Ensure interest was not already reported on 1099‑CAP
Deadline or filing window
The borrower copy (Copy B) must be mailed by January 31 of the year following the cancellation. Paper filings to the IRS are due by February 28; electronic filings are due by March 31. Extensions are not permitted.
- —Original debt amount | – | – | Verify the amount matches the loan agreement
- —Market‑discount cancelled | Enter amount from calculation | Taxable portion (usually same as cancelled) | Confirm with lender’s discount schedule
Checklist
What you need before filling it out
Borrower name/TIN
Loan agreement or borrower’s tax ID document · Borrower’s account records
Original debt amount
Original loan statement · Loan ledger
Market‑discount cancelled
Discount schedule · Internal accounting
Taxable portion
Same as cancelled amount (unless elected otherwise) · Form instructions
Payer EIN
Employer Identification Number · Business registration
Signature
Authorized officer signature · Physical copy of form
Before you submit
- 1Confirm borrower’s name and TIN match IRS records.
- 2Verify the cancelled market‑discount amount is correct.
- 3Enter the taxable portion in Box 2 (usually same as Box 1).
- 4Check that the payer’s name and EIN are accurate.
- 5Sign the paper form or complete the electronic signature process.
- 6Select the correct tax year on the form.
- 7Attach required transmittal (Form 1096) for paper filings.
- 8Send Copy B to the borrower by January 31.
- 9File paper copy to the correct IRS address.
- 10If filing electronically, upload through FIRE before March 31.
- 11Retain a copy of the completed form for your records.
- 12Verify that the total number of forms matches the transmittal.
How to file this form
- 1Gather loan documents and calculate market‑discount cancelled.
- 2Fill payer and recipient information on Form 1099‑CAP.
- 3Enter amounts in Box 1 (cancelled) and Box 2 (taxable).
- 4Prepare Form 1096 if filing paper copies.
- 5Mail paper copies (Copy A + 1096) to the IRS address; send Copy B to the borrower.
- 6Or upload the completed form via the IRS FIRE system before the electronic deadline.
- 7Confirm receipt acknowledgment from the IRS (FIRE acceptance code).
- 8File a copy of the submission confirmation in your records.
Known limitations
- 1IRS instructions do not provide a calculator for market‑discount; amounts must be derived internally.
- 2Form does not accept multiple borrowers on one line; each borrower needs a separate form.
- 3Electronic filing requires a registered Transmitter Control Code (TCC).
- 4The form does not capture state tax reporting; separate state filings may be required.
Field map
Compact field-by-field guide
Payer Info
1 items
Identifying information of the business or person making the payment.
Recipient Info
1 items
Identifying information of the person or entity receiving the payment.
Amounts
1 items
The payment amount subject to reporting for the applicable box category.
Withholding
1 items
Backup withholding amount if applicable.
Signatures
1 items
Name and phone number of the person to contact about this return.
Almost done reviewing the fields?
Fillable formOpen in Editor->Form 1099‑CAP is an active information return for tax year 2024. The latest revision is dated January 2024.
What changed or needs a fresh check
- Edition date: Verify the form is the 2024 revision.
- Fee: No filing fee for 1099‑CAP.
- Mailing address: Use IRS address for information returns (see IRS Publication 1220).
- Electronic filing: Required if filing 250+ forms.
- Signature line: Must be signed if filing paper.
- Copy distribution: Copy B to borrower, Copy A to IRS.
Quick Facts
Downloads
After you file
- 1Keep the signed copy and any supporting calculations for at least three years.
- 2Record the IRS acknowledgment number (if filed electronically).
- 3Monitor for any IRS notices of correction or penalty.
- 4Update your internal accounting to reflect the reported taxable amount.
- 5Provide the borrower with a copy of the filed form for their records.
- 6Reconcile the totals on Form 1096 with the number of 1099‑CAPs filed.
- 7Document the filing date and method for audit trails.
Sources
- SRCIRS Instructions for Form 1099‑CAP, 2024 editionconfirms purpose and filing deadlines
- SRCIRS Publication 1220addresses electronic filing requirements and addresses
- SRCForm 1099‑CAP PDFshows boxes, signature line, and copy designations
- SRCIRS FIRE system documentationoutlines electronic filing dates
- SRCIRS Penalty Handbooklists $250 per‑form penalty for incorrect information
- SRCNot found in provided source: exact fee schedule (form has no fee)
- SRCNot found in provided source: state filing requirements
Common confusion points
Market‑discount vs. ordinary debt forgiveness
Users think any forgiven debt uses 1099‑CAP
→ Verify if the discount is defined by market‑discount rules
Box 1 vs. Box 2 amounts
Both boxes often contain the same number
→ Confirm if any portion is excluded from taxable income
Electronic vs. paper deadline
Some think both are Jan 31
→ Remember paper deadline is Feb 28, electronic is Mar 31
Copy distribution
Unclear which copy goes to borrower
→ Copy B is for borrower, Copy A for IRS
Form 1096 requirement
Users assume it’s always needed
→ Only required for paper filings, not electronic
TIN format
Confusion over SSN vs. EIN
→ Use borrower’s SSN for individuals, EIN for entities
Workflow map
Related forms and next steps
Before
Current
After
Often used with
⚠ If something goes wrong
- Form 1099‑X – used to correct a previously filed 1099‑CAP
Source transparency
Copyright & Licensing - US Government Forms
BrieflyGo links to and explains official public form sources. We are not a government agency, and this page is for general form guidance, not legal advice.
Never sign without understanding every clause.
BrieflyGo reviews your contracts in plain English — instantly.