1099-C from VA short Sale reportable?

Foreclosures, Short Sales, Tax Foreclosures
1

Sorry guys; I see there are a lot of topics on short sales and such and I did try to go through them all but unfortunately was unable to find my answer and I hope I’m not being too redundant and asking a question that’s been asked before. Anyway, I received a 1099-C cancellation of debt from a VA home loan short sale that occured Sept of last year. Since it was a VA short sale and I had a VA loan that was written off, is that cancellation of debt reportable as income to the IRS? Any help is appreciated…

Thanks!
Claire

2

any remaining balance can be taxable. :cry:

3

If you can prove that you were insolvent when the debt was forgiven, you should be able to avoid paying tax on the 1099 amount.

Include a statement saying why you are not including the amount in your income and a balance sheet that shows your negative net worth with no liquidity.