Short Sales 1099-c

yes you have to report the sale.  mortgages have nothing to do with gain or loss.

basically gain/loss is selling price less cost of sales less acquisition cost reduced by depreciation taken or that should have been taken.

the 1099-C is income from debt cancellation that does not affect gain. you can use form 982 to reduce or eliminate the taxability of the discharge. this is a little technical so you may want to consult a pro.

https://www.irs.gov/pub/irs-pdf/f982.pdf

Yes, you report the sale of the rental property as any other sale.  Follow these steps to report the sale of the rental property:

1. With your return open in TurboTax, search for rentals and then select the Jump to link in the search result.
2. Answer Yes to the question Did you have any income from rentals or royalties?
3. When you get to What are you here to report? select Rental property and fill out the description, address, and owner.
4. When you hit Tell us about your situation this year check the Sold box along with any other boxes that may apply.
5. Continue following the onscreen prompts to enter info about your rental property. Eventually, you'll get to the Review your rental property info screen. You can report the sale in the Expenses/Assets (Depreciation) section, along with any other pertinent info (like income and expenses)

Tip: Take your time and pay close attention. There's a lot of info and it's easy to miss if you're in a hurry.

Similar to a foreclosure, any debt that your mortgage lender cancels because of a short sale is taxable only if the terms of your mortgage hold you personally liable for the full amount of the loan. Regardless of the tax consequences, your lender will report the debt cancellation on a 1099-C form.

Whenever you sell a home, you need to calculate your capital gains to determine whether you owe any tax. If you engage in a short sale or your mortgage lender forecloses on your home, the Internal Revenue Service treats it just like a sale. Foreclosures and short sales may also require you to recognize ordinary income if the lender cancels any of your outstanding mortgage balance and you’re ineligible for an exclusion.

I did what you said and it is not working because I did not rent the property all year and had no income from it so it is not a rental property. I have deluxe do I need to upgrade to premier. I can not report the sale

You can always start with the free additional and TurboTax will prompt you to upgrade depending on your particular situation. Given your circumstances, you will want to upgrade to TurboTax Premier to report your rental activities including your rental sale.

As long as property was available for rent it is considered rental property.  Upgrade to Premiere and the process should work.