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1099 is not unusual for "debt forgiveness" - I've seen them issued to individuals who negotiated credit card debt away. If you sent a 1099 to the state medicaid agency, I think the only thing that would happen is you would spend $.49 on a stamp.
I'm puzzled as to why the debt write off on the business side is not deductible. We're the revenues not taxed when the agency was billed? Perhaps you're a cash basis taxpayer?
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Jacob
Current: 1983 911 GT4 Race Car / 1999 Spec Miata / 2000 MB SL500 / 1998 MB E300TD / 1998 BMW R1100RT / 2016 KTM Duke 690
Past: 2009 997 Turbo Cab / 1979 930
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