A Cancellation of Debt Income, or CODI, is reported to the IRS through a 1099-C. When a debt is canceled, discharged or forgiven, you must include the amount canceled in your gross income, and pay taxes on said income – unless you qualify for an exception or exclusion. In the case where a creditor forgives $600 of debt, or more, you are required to file a Form 1099-C.