It is tax season again and I feel like everyone is asking me about tax liability concerning a 1099-C that they received. A 1099-C is issued by a lender as a result of a cancelled debt and is often issued as a result of a mortgage foreclosure. The Mortgage Debt Relief Act was enacted in 2007 and generally allows taxpayers to exclude from income the amount of debt discharged as a result of foreclosure. To see if this provision applies to you talk to your accountant or lawyer. There is also information on the IRS website which you may read and find informative.