I'm not sure of the legalities of your situation, but you can enter the Form 1099-C in TurboTax and the cancellation of debt may not be taxable depending on whether it was your main home that was foreclosed on and whether the loan was recourse or non-recourse. You enter the Form 1099-C in the Wages and Income section, then Less Common Income, then Miscellaneous Income, 1099-A, 1099-C. TurboTax will ask you the questions necessary to determine if the income is taxable.
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