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Since July 2010, she has been living in the house, paying no mortgage or property taxes. She lives in Ohio. I think the house went into foreclosure in December 2010.


Foreclosure was started in December 2010. Is the title still in her name? My understanding is the critical date is when the bank takes title to the property. If it had been necessary for a relative to declare bankruptcy to avoid taxes on a short sale, the lawyer's recommendation was to file the day before the foreclosure/short sale completed.

The 1099C is issued for the tax year that the bank takes possession of the title. Foreclosure started in December 2010. It is likely that the foreclosure is not complete, which would make the foreclosure reportable in the 2011 tax year.
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