Below is a recent Q& A article with Yesner & Boss Attorney Jo Ann Koontz published in the Sarasota Herald-Tribue on how to "Come Out Clean From a Short Sale"

As a real estate attorney and certified public accountant, Jo Ann Koontz is an expert on short sales and foreclosures. She came to Sarasota from Ohio just as the housing market started to tumble, and worked at Icard Merrill for five years. Since February 2010, she has headed the Sarasota branch of Yesner & Boss PL, a St. Petersburg-based law firm. Correspondent Chris Angermann talked to her at her office in City Center (the Wachovia building) on Main Street.

Q: From your perspective, how is the real estate market doing?

A: I think we still have some tunnel left before we see the light again. The numbers of foreclosure filings are still striking double digits every month. More and more folks are going into foreclosure both voluntarily and involuntarily — people who can't pay their bills and people who decide, strategically, it doesn't make sense for them to continue to pay the mortgage.

For many, it is an opportunity to start over fresh, minimize their expense, and get back on their feet without going into bankruptcy. Often it is the real estate that's killing them, and foreclosure or a short sale is a way to stop the bleeding.

Q: What are the tax implications for short sales and foreclosures?

A: Some people think they can avoid the tax impact of the short sale by going into foreclosure, but they're virtually the same. The taxes come from forgiveness or cancellation of debt.

When sellers borrow money from the bank, they have an obligation to repay the loan. The moment the obligation goes away, the bank is required to report any forgiveness of debt over $600 (on form 1099C), and the owner is taxed on that amount at the ordinary income-tax rate. So if you're being forgiven, say, $150,000, it can bump you into the highest tax bracket, which is 35 percent; and you end up owing the IRS more than $50,000.