Tax Consequences of Short Sales and Foreclosures

What are the tax consequences of a short sale or a foreclosure for a property owner? The IRS has provided some answers in "Questions and Answers on Home Foreclosure and Debt Cancellation". While short sales and foreclosures can have tax consequences, special rules can lessen the tax burden to the homeowner. Every situation is different though. Please consult a tax professional to discuss your specific situation if you may be effected by a short sale or foreclosure.