In which case will the taxpayer be able to exclude all income from their canceled debt? The taxpayer: 1. Received a form 1099-C with $17,400 in box 2 and $15,700 in box 7, and they were insolvent by$15,800. 2. Had a debt of $5,400 canceled. Immediately prior to the debt, they were insolvent by $2,750. 3. Had $11,500 of debt canceled? Immediately prior to the cancellation, they were insolvent by $12,000. 4. Had a debt of $7,850 canceled Immediately prior to the rest, they were insolvent by $6,500.