DEAR BRUCE: I am facing foreclosure on a three-family investment property. The lender has suggested I try a short sale. In reading the short-sale package, it states they will issue a 1099 to the IRS for the shortfall. I am now thinking about simply letting it go through the foreclosure process instead, if that would allow me to avoid the tax consequences of the short sale. What are your thoughts? -- L.R. Torrington, Conn.

DEAR L.R.: Before you do anything, I would suggest that you sit down and chat with a knowledgeable tax accountant. In some, but possibly not all circumstances, the government has taken a different point of view toward the "profit" from a short sale. Heretofore, if a lender forgave an amount of money on a loan, that was considered income to the person who received the forgiveness. That is not true in every instance now. Rather than speculate on whether this would apply to you, I urge you to consult a competent accountant.

DEAR BRUCE: My wife and I own a furniture business. We lease a 30,000-square-foot building. A pharmaceutical store has purchased the land from our landlord and also my remaining seven-year lease. We agreed to a figure of $750,000 because that is what is would take for us to rent or build a comparable building for the remainder of our seven years. We decided to build a strip mall with the furniture store on one end and four rental spots on the other. Because of the rental spots, we would not be in such a financial bind with the mortgage, and because we are reinvesting the entire amount of the lease buyout money into the new building, we could lower the rent for the tenants, which would help the economy with new business and more jobs. We did not realize until later that the government would take almost 50 percent right off the top. This isn't money that we were going to stick in our pockets. We are not a big corporation and asking for money that is not ours. We are using this money as we would have our rent money had we decided not to sell out our lease. We are also helping other businesses as well. If we do have to give 50 percent up front, our mortgage will be crazy high and so will our rental fees. Can someone help us? -- Desperate for help Jim and Carolyn

DEAR JIM AND CAROLYN: I truly sympathize with your situation, but this appears to be locking the barn door after the animals are gone. It may be that this deal could have been constructed differently with a lesser tax impact. I say "may" because I don't know. This illustrates why it is so important to talk to a competent tax specialist before any kind of deal of consequence is inked. I am surprised at the number, and it may be that through some type of other tax maneuvering that could be reduced. I have little to offer but my sympathy. There is a very strong lesson here. Anytime you're involved in a business environment of any consequence, it is absolutely essential to go over all of the fine details from a legal and a tax point of view; otherwise, you invite disaster.

DEAR BRUCE: My daughter is 45. She is collecting $674 a month from Social Security due to medical problems and mental illness. I just found out that my daughter and her friend's income together is $1,150 a month from Social Security survivors benefits. My daughter was able to obtain financing for a 2005 truck. Her friend tried to get financing and was turned down, but she was approved based on the combined income of her and her friend, although his name is not on the bank loan or the title. How could the dealership do this? Are they so desperate for sales that they would permit someone who didn't have a dime for a down payment to drive away in a truck for which she now owes $22,000? I spoke with her mental-health worker today, and she said she sees nothing illegal involved. I have filed a complaint with the Illinois Attorney General and hope they will take some action. I assume the worst that can happen is the truck will be repossessed and a judgment entered against my daughter, since Social Security benefits are not garnishable in a case like this. -- C.B., via e-mail

DEAR C.B.: I have to conclude that your mental-health worker is correct when she's seen nothing illegal here. You say you disagree, on what basis? If they want to give her a note for whatever amount and she signs the note, so be it. It does seem a little heavy for a 4-year-old truck, and I don't see how in the world anyone is going to expect to get paid since her payment must be pretty close to what her monthly income is. That having been acknowledged, she'll drive a truck for awhile, repossess it and get a judgment against her. Given the fact that she has no income, no prospects for any income and the little that she has cannot be garnisheed, I don't see any great harm coming to her.