I am a bit confused. I asked this question couple of days ago here and the same question I asked with Accountant. I got two different answers.
I have a rental property, not my primary residence. This property is going through short sale. This is the situation.
My Credit card debt 40,000
loan on primary residence: 160000 (All Acquisition debt, no equity loan)
Loan for property going through short sale: 140000 (All Acquisition debt, no equity loan)
Car loan: 20,000
Total Liability right before the mortgage loan forgiveness = 360,000
Property under short sold: 50,000
Primary residence: 160,000
Other assets cash etc = 3000
Retirement Fund= 95000
Total Assets = 240,000
Insolvent up to 120000. Do I pay taxes
on this loan forgiveness? Please advise.