Good question. In the event of a short sale where the lender ends up taking less on the loan secured by the property sold where the seller essentially gets forgiveness of debt on the loan through the sale, the seller can have possible tax issues where the forgiven debt could be deemed income for tax purposes.If you are in such a situation, I suggest that you consult with a real estate attorney who also does tax law for a further detailed opinion as to the possible tax consequences to you in the event of a short sale and the forgiveness of debt owed on the secured loan.