Here's the situation.

Tenants are living in investment property that has just received the Notice of Default, and is nearing a Trustee Sale.

They want to buy the house and engaged a REALTOR to write up the offer.

The Seller is adamant that he doesn't want to use a REALTOR because he says the Lender will tack on the sales commission paid to the 1099 that will be issued after the sale, which, if that is true, will increase his tax obligation. This is going to be a short sale, but because it is not the seller's primary property, this will not qualify under the Mortgage Debt Forgiveness Act of 2007.

So...those of you have have run into this situation --- will the 1099 reflect the commissions paid to the REALTOR?