I'm sure this topic has been covered many times so my apologies for the redundancy. The facts: In 1994 client gets a mortgage loan and purchases a house for $39,000. He allowed a grandchild live in the house rent-free for years. In 2010 the client could no longer make the payments and the bank takes the house back via short sale. Closing agent issues the client a 1099-S for $9,000 for the proceeds which went to the bank. Mortgage balance at time of short sale was $18,000. Client did not receive a 1099c from the bank. Any suggestions, advice, ideas, etc. on the proper reporting of the short sale and the 1099-S. Thanks.