The following Links will provide excellent information on Foreclosures, "Short Sales", Cancellation of Discharge of indebtedness and Reduction of Tax Attributes: Tax Aspects of Rental Property Foreclosures and "Short Sales" Foreclosure / Short Sale Flowchart Tax Consequences of Foreclosures and Short Sales-Debunking the Myths IRC Section 108 Income from Discharge of indebtedness Canceled Debts, Foreclosures, Repossessions, and Abandonments Treasury Regulation 1.108-7 Reduction of tax Atributes from discharge of indebtedness Income A primer on Cancellation of Debt and Related Partnership Matters