Received 1099A from mortgage foreclosure need...

[db07]

...help!? Our home started in foreclosure in Sept of 2006, sheriff's sale in March of 2007 redemption period ended Sept 2007. Received 1099 A form in Jan 2008. Box 1 states: 9/14/07 Box 2 states: $341,569.85 Box 4 states: 335,000.00 (This is the amount that their appraisal came in at I think in the fall of 2006) Box 5: Yes. The home is still on the market as it did not sell in the short sale we did. The list price went as low as $335,000 during the short sale - when we had to move out they hired their own realtor and listed it at $299,000 it has been dropped to $269,000 just recently. What am I going to have to claim as income on taxes and am I also going to get a lien when the home sells? Any info will help me at this time. Thank you in advance.
I just wanted to add that I live in Minnesota and the home was our primary residence for 3+ years when this happened.