1099-C for short sale of rental property

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A client received a 1099-C for the short sale of rental property. Since the cancelled debt is considered income on line 3 of Schedule E, does Form 982 have to be filed for this short sale? How does insolvency come into play with the short sale of a rental property? I was told by a tax peer that insolvency is NOT considered when the short sale pertains to rental property - is this true?

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