My husband shortsold his primary residence in 2008 and was issued a 1099C in 2016. We know we don't have to pay Federal Tax, but what, if anything, can we do for CA tax?

At the time of the short sale my husband was insolvent, however, the date of issuance (and now dealing with it in 2018 as we never received the 1099c due to the bank not knowing where we currently live and only learned about it when getting a tax due bill from the IRS) I am not sure we qualify?


EDITED to add, that this was a second mortgage that was ONLY used in securing the property during the initial sale.  During the Short Sale, the first agreed to the sale and immediately forgave the remaining balance.  The second received a very small amount (about $3,000) and they never forgave the remaining balance keeping the right to pursue the unpaid balance.  It took 8 years for them to 'cancel' the debt.

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