For your principal residence the feds allow you to exclude up to $2 million of qualified mortgage indebtedness under the Mortgage Forgiveness Debt Relief Act of 2007, and California allows the same exclusion, but limits the debt to be excluded to $500,000. If the Act does not provide sufficient coverage or this is not your principal residence or qualified residence indebtedness then you can look to exclude the income under IRC Section 108 if you are insolvent or discharge the debt in a bankruptcy.
This is a tough question to answer with the minimal facts presented. If you hold title as Joint Tenants, then if any one of the tenants die, the remaining tenants take the property. Nothing will go to the estate of the deceased tenant. If you hold title as tenants in common, their is no automatic transfer on death by operation of law as with a joint tenancy. The interest will have to be probated if it is not disposed of by will or trust. Therefore, joint tenancy will avoid probate and...
You can gift $13,000 to any person each year, $26,000 with split gifting without gift tax consequences. Beyond this amount you must use your life time gift tax exclusion which is currently $5,000,000. So long as you do not exceed this exclusion you will not have any gift taxes payable.
You are required to receive an accounting and a K-1 for your distributive share. You should ask for a copy of the tax return, even if you do not have an absolute right to receive it. Most the time a trustee will provide it to you upon request.
Yes, you need to file. You have a filing requirement and to not file is a crime. Just because the IRS has not caught up with you yet does not mean that they will not eventually catch up with you. See a tax professional that can help you get all of your past filings completed.