The IRS has yet to rule on the tax treatment of relocation payments under the Home Affordable Foreclosure Alternatives (HAFA) program, and some people in your situation have received a Form 1099-A or C. However, there is a good argument to be made that the payment is tax free. Government payments made to promote the general welfare are not taxed. However, if you use the payment for moving expenses, you can’t exclude the income and take a moving expense deduction. Talk to your tax advisor.
A 12-month period ending on the last day of any month other than December. Partnerships, S corporations, and personal service corporations are limited in their choice of fiscal years and face special restrictions.