When a taxpayer is unable to pay all of a debt and the creditor cancels the unpaid part, the amount of the canceled debt is generally treated as income to the taxpayer under federal tax law.  The creditor reports this on a Form 1099-C.  However, there are several exceptions to that general rule.  Some of these are: (1) If a PPP loan is forgiven, that money is not counted as income pursuant to the CARES Act. (2) Debts discharged in bankruptcy (Chap. 7, 11, 12 and 13) are excluded from gross income. (3) When the debt of an insolvent person is discharged, that debt is not counted as income to the extent of his insolvency. (4) Principal residence mortgage debt that is discharged is not counted as income up to two million dollars. (5) Student loan debt can be discharged and not counted as income if the student agrees to work for a certain length of time in certain professions for certain employers.  There are others not listed due to space.  Form 982 must be filed by the debtor if he is claiming that his discharged debt is not income.