Can this be correct, TP gets about $100K cancelled, remains in the residence and the 1099-C amt avoids taxation thru a loan modification. Part III " Computation of gain or loss from foreclosure, repossession, abandonment, short sale, or other transfer of property" of the worksheet all has to do with the TP vacating the residential home and I would think "loan modification" has to do with the TP remaining in the home yet when I check the loan modificaton box, it generates no taxes on the 1099-C.