Discharge of indebtedness situation

Reference no: EM13972683

Determine the amount of income that must be recognized in each discharge of indebtedness situation that follows.

a. Marvin owes Central State Bank $80,000. The bank agrees to reduce the debt to $60,000. Prior to the debt reduction, Marvin's assets total $350,000 and his liabilities are $330,000.

b. Assume the same facts as in part a, except that Marvin's liabilities are $400,000 before the forgiveness of debt.

c. Assume the same facts as in part a, except that the debt is a mortgage on his principal residence.

Reference no: EM13972683

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