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What the results of the debt cancellation are

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Problem 1: Jeffrey owns 100% of HR Company. In 2019, he lent the firm $70,000. In 2020, he cancelled the debt. The results of this debt cancellation are:

A. HR Company recognizes $70,000 gain; no effect to Jeffrey
B. HR Company recognizes $70,000 gain; Jeffry has $70,000 bad debt
C. HR Company has no income; no effect to Jeffrey
D. HR Company has no income; Jeffrey has $70,000 bad debt
E. HR Company has no income; Jeffrey increases his basis in HR Company Stock

Reference no: EM132815595

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