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What is the maximum amount the creditor can forgive

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Reference no: EM132816864

Question - John was having difficulties making a payment on a loan to a business creditor and the creditor is willing to forgive part of the balance of $250,000 remaining on the loan. Prior to any forgiveness of debt, John listed assets worth $500,000 and liabilities of $550,000. What is the maximum amount the creditor can forgive without John having to recognize any taxable income?

Reference no: EM132816864

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