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I sold my house on a short sale last year and I receives a…

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I sold my house...

I sold my house on a short sale last year and I receives a 1099-c and line 2 line 7 is marked $amount of debt discharded was $200.551 and line 4 says mortage- short sale and line 5 says marked with a x. line 6 is marked F.

Accountant's Assistant: Because real estate law varies from place to place, can you tell me what state this is in?

Illinois

Accountant's Assistant: Has any paperwork been filed?

Yes

Accountant's Assistant: Anything else you want the lawyer to know before I connect you?

Yes line 7 was marked fair market as $0000

Submitted: 1 month ago.Category: Tax
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Answered in 1 hour by:
3/8/2018
Tax Professional: Lev, Tax Advisor replied 1 month ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 32,692
Experience: Taxes, Immigration, Labor Relations
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Illinois is generally considered a recourse state.That actually means - if the property is sold for less than the mortgage balance whether a "short sale" or "foreclosure".The lender can come after you for any deficiency.That is why box on line 5 is checked.The amount reported in box 2 $200,551 is considered COD income - cancellation of debt income.In generally - it is taxable - but you might be eligible to exclude that debt from gross income if for instance you are insolvent.Let me know if you need any help with verification.
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Lev
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