Discharging a 1099 in a ch 7?

[a.fla]

We are short selling our home and our lawyer said that we wouldn't be responsible for paying the 1099, but didn't explain why. He's kind of hard to reach so in the meantime, maybe someone here could answer that for me? We are closing on it before we move to FL from CA and waiting until March to file, but being that it's IRS, how can you not be responsible to pay that?
Thanks.

[HHM]

Might need more background on your situation...have you filed BK yet?

If I had to guess...it's NOT that you would be discharging the 1099 in the BK...because you CANT do that, the tax is too new.
What I am thinking your attorney may be getting at is that because you can qualify for a chapter 7, you would also qualify to be insolvent under IRS standards (see form 982). If you are insolvent under IRS standards, you are not responsible to pay income tax on forgiven debt.

[a.fla]

We aren't filing until March because we're moving to FL and we have to wait 91 days after living there to file. Our short sale was accepted, but hasn't closed yet. Does the chapter 7 itself prove that we were insolvent then?