Huge tax bill for homeowners for 'short' sales

Out of work for more than a year, Dale Ottley was relieved when she was able to sell her Woodland Hills condominium for $230,000 - even though it was a "short sale" on which she lost $200,000. Gregory J. Wilcox in the Daily News.

Now she faces the possibility of having to pay state income tax on the $200,000 debt that her mortgage holder erased when she sold her condo for less than she'd paid for it.

"That would be monumentally unfair," said Ottley, who is still looking for an accounting job. "It wasn't income to me. It just stopped the (financial) hemorrhaging for me."