Explains the Mortgage Debt Forgiveness Act of 2007:
http://en.wikipedia.org/wiki/Mortgage_Forgiveness_Debt_Relief_Act_of_2007
Great article that goes over the good and the bad of a short sale for all parties:
http://www.bankrate.com/brm/news/realestateguide2008/buying-short-sales-a1.asp
Realtor.org page of short sale articles and links:
http://www.realtor.org/library/library/fg335
IRS site:
http://www.irs.ustreas.gov/
Please note that I am NOT an attorney, nor a tax professional. I am not attempting to give legal or tax advise.
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