Would it be taxed as "ordinary income" at that point?  

Now during the crisis the lenders put a moratorium on issuing the 1099C to any owner occ. and many others as they were just over whelmed.. but these as you note that the other person got one.. the banks are now issuing them.what this does is tells the IRS you got debt relief and said amount of debt relief then become ordinary income and you must pay tax on it..

Any such notice or demand shall be deemed to have been received by you when it would have been delivered in the ordinary course of post.13.

But the ordinary noise of people living in their space is part of life when you live in a poorly constructed upstairs/downstairs situation.The best thing you can do in the future is warn your tenants about this.

@Brit FosheeThis can be a great strategy.

Jason Brooks, I don't want to change the subject, but I believe if you are a real estate investor, proceeds for a fix n flip are ordinary income, not capital gains.

Then you can buy real estate either for long term hold or short term.There are some nasty taxes that apply to ordinary IRAs.

The renovations would need to qualify as "ordinary and necessary" expenses in regards to operating this property as a rental.

Or, if your investment holdings are in a Roth IRA, your investment gains accumulate tax-free, and you can withdraw it tax-free.You still must wait until you reach age 59½ to withdraw your funds, or else you will be subject to an early withdrawal penalty, and the withdrawal will be included as ordinary income on your tax return.

You pay taxes on your net rental income as you described and it’s ordinary income taxed at your applicable effective tax rate.