Mortgage Relief Act

[NotEasy]

Taxpayer has a property short sale in 2011 and received a 1099-C due to the cancellation of mortgage.

He has used 50% of the property as his primary residence and rented out the other 50% of it. Can the Mortgage Relief Act be applied to the 50% of property that was his primary residence and therefore he does not have to recognize 50% of the cancellation of mortgage as income?

[BP.]

Taxpayer has a property short sale in 2011 and received a 1099-C due to the cancellation of mortgage.

He has used 50% of the property as his primary residence and rented out the other 50% of it. Can the Mortgage Relief Act be applied to the 50% of property that was his primary residence and therefore he does not have to recognize 50% of the cancellation of mortgage as income?

It's possible. Have a look at TTB 14-11 to 14-14, and the worksheet on the bottom of 14-12. Maybe that will help.