Most of the sellers who have sold their home in 2010 as a short sale you should or will be receiving a 1099 in the mail. A 1099 is a form to report income to IRS, in some instances the mortgage company will send the 1099s to IRS stating that their loss (the difference between what you owed the mortgage company and what the property was sold for) is considered income to you. HR3648
If you normally file your taxes your self, it is my suggestion that this year you take all of your paperwork to a tax accountant for preparation. Eventhough you have receive the 1099 you may or may not have to pay taxes on the banks lost depending on the 1099 you receive. Please contact a tax accountant. Here is link to find additional information regarding short sale and tax consequences
http://www.cbo.gov/ftpdocs/86xx/doc8667/hr3648.pdf This program only pertains to sellers who short sold their primary residence.
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