I received a 1099 form from my timeshare. The FMV is more the and amount owed and it says I am responsible for the debt. Does this mean I need to report the difference of the 2 amounts as gain. (Even though I have no proof that the timeshare was actually sold and I did not receive any money from such a sale?)

This was a 1099-A form, and not a 1099-C - correct? The 1099-A is sent for information purposes, and documents that you effectively sold the property in exchange for forgiveness of the loan. Since FMV is greater than the principal amount, the lender made out OK. You do not need to report the sale on your taxes unless you had a gain, meaning that the amount of the principal that was forgiven is greater than your adjusted cost basis in the time share.