Question

O $12.000 O $48.000 O $60,000 Mark for follow up Question 2 of 75. All income from a canceled debt may be excluded from income if the taxpayer O Received a Form 1099-C with $18.400 in box 2 and 516,700 in box 7 and they were insolvent by $2,900. Had a debt of $5,400 canceled, and prior to the debt, they were insolvent by $2.750. Had $12,500 of debt canceled, and prior to the cancellation, they were insolvent by $13,000. Had a debt of $8,750 canceled, and prior to the debt, they were insolvent by $7,500. Mark for follow up Question 3 of 75. A cancellation of debt being included in income results if the Canceled debt was intended as a gift. Debtor was insolvent by more than the amount of the canceled debt. Debtor was solvent at the time of debt cancellation Debt was canceled through a Chapter 7 bankruptcy. Mark for follow up

Answer 1

Answer 2:

Correct answer is:

Had $12,500 of cancelled debt, and prior to the cancellation, they were insolvent by $13,000

Explanation:

Cancelled debt is excluded from Gross income if debtor was insolvent by more than the amount of the cancelled debt.

Hence statement a, b and d are incorrect.

Option c is correct.

Answer 3:

Correct answer is:

Debtor was solvent at the time of debt cancellation

Explanation:

Cancelled debt is excluded from Gross income if:

the cancelled debt was intended as gift

Debtor was insolvent by more than the amount of the cancelled debt

Debt was cancelled through a bankruptcy

A cancellation of debt being included in income results if debtor was solvent at the time of debt cancellation

Option C is correct and other options A, B and D are incorrect.