Contra Costa Times - "Loan forgiven, not forgotten" (2-20-07)

"When a short sale, deed-in-lieu agreement or foreclosure occurs and a residential lender loses money on a loan, the lender will most likely file the loss with the Internal Revenue Service, and the former homeowner may end up owing thousands of dollars in taxable income. It comes in the form of a 1099-C, or Cancellation of Debt. According to the IRS, the cancellation or forgiveness of a debt is the same as if the lender handed the homeowner cash and shook hands."