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Would like to know if a foreclosed house is sold for an amount less than the amount owed on the mortgage, will the owner receive a 1099 for the difference between the sale and the amount owed the bank who holds the mortgage?

A CPA told me she thought that tax rule had been suspended by Obama stimulus plan. Homeowner tells me that is not true, taxes would be due on the difference between sale price and mortgage owed.

This person is going to declare bankruptcy with the hope she will not be taxed on the difference and that it will not be counted as income.

TIA, Birgit
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