Loans in Balance Forward Plans

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I am curious as to how other shops handle defaulted loans in the balance forward world. For example, how do you handle a loan that is made in December, 2002 and payments are made through March, 2003. The loan would be in default and would become a deemed distribution as of 6/30/03. In most cases you would not get any information until February or March of 2004. How would you handle the 1099s?

[Mike Preston]

Been there. Done that. Issue them when you know about them. Never seen any late fees applied for being late. There was a period there where late fees for 1099's were the same as 5500's. Something like $25/day up to $15,000. Ridiculous. Now, the penalty is supposedly $50/form, but that can be waived if there is reasonable cause, and I'm pretty sure this would qualify as reasonable cause to anyone except the truly hard-hearted.