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Q: will the mortgage interest help me undo the 1099 I may get?
A: The mortgage interest deduction will reduce your taxable income. While you will be able to claim the $78,000 as a deduction, only a percentage of that amount applies towards the reduction of your taxable income. The mortgage interest deduction won't cancel out the 1099-C income.
For more information regarding mortgage interest deduction, you can refer to the IRS Pub 936.
Link to Pub 936:
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