What is the potential cancellation of debt income when recourse debt of $70,000 on property with a fair market value of $58,000 is cancelled?
a) $12,000
b) $58,000
c) $70,000
d) $128,000
So the correct answer is A.
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CODI = Debt - FMV of property
= 70000 – 58000
= 12000
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Hope that helps.
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