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As some of you know, last March, I received a notice from the IRS that I had underreported my income for 2010 by more than $2700 as a result of 1099-C filed by Portfolio Recovery Associates. I argued my case with the Automatic Under Reporter unit but, this past August, I was issued a Notice of Deficiency with a tax bill (including interest) of over $800. While this isn't a huge sum, I objected primarily because the debt that generated this supposed income was defaulted on in the mid-90's and I believe that I had evidence that an "identifiable event" had occurred long before 2010. Rather than paying up, I decided to take my case to Tax Court. I filed my petition in November, received the IRS' answer in December and was contacted by the IRS Appeals Office in February. I provided my Appeals Officer with documents (monthly statements and letters) as well as an outline of how case law supported my position. I had my Appeals Conference this morning and I am THRILLED to say that, after reviewing the facts, the appeals officer sided with me - I do not have to include the $2700+ from cancellation of debt in my income and no additional taxes are due!!!! My only "gripe" is that this decision does not include the taxes that I have already paid on a 2nd, smaller 1099-C issued by PRA for the same year. At the time, I wasn't sure how to fight it but I knew that the IRS would have record of it so I included it. (For the record, Turbo Tax doesn't give you much info about how to deal with 1099-Cs.) I included this amount in my petition to the Tax Court, indicating that I was due a refund for any taxes paid ($175 by my count) so, if we had actually gone to court, I think I could have gotten a ruling on this as well. The appeals officer indicated that I could file an amended return but I will have to talk it over with my wife and tax advisor. My case was quite similar to another recent Tax Court case - Stewart v Commissioner (2012) - same original creditor, same junk debt buyer, default occurred in mid-90's, 1099-C issued years later after debtor sent cease communication letter, etc.. My petition was different (I stayed away from issues that were dismissed by the Court) but this opinion is a must read for anyone who receives a 1099-C for an old, out of statute debt. Each case is different but I believe that the thing that swayed the appeals officer was the amount and type of documentation I provided. If you don't have anything because it's an older debt, you'll probably have a tougher fight. Thanks for the support and info I found on this board while I was researching this issue and preparing my case.