Question

Deborah, who is single, is having financial trouble and stopped paying her VISA credit card. After several months the credit company worked out a payment plan with her. She has a $10,000 balance and is required to pay $100 a month for five years. The total payments amount to a flat $6,000 with no interest or finance charges. Deborah does not have to report income for the $4,000 that she does not have to repay.

True False

Barney and Betty, married filing jointly, sold their home for $750,000 and purchased it for $200,000. They have lived in the home for the last 20 years. How much of the gain is included in their gross income?

   A.  
$250,000

    B.  
$300,000

    C.  
$50,000

    D.  
None of the above.

    E.  
$550,000

Answer 1

Deborah, who is single, is having financial trouble and stopped paying her VISA credit card. After several months the credit company worked out a payment plan with her. She has a $10,000 balance and is required to pay $100 a month for five years. The total payments amount to a flat $6,000 with no interest or finance charges. Deborah does not have to report income for the $4,000 that she does not have to repay.	FALSE	Deborah's remaining $4,000 may be considered taxable income.Bank is required to send Deborah and the IRS 1099-C notices showing the amount of the forgiven debt. Depending on the individual’s income level, deductions and tax bracket, they may owe taxes on that canceled debt income.
Barney and Betty, married filing jointly, sold their home for $750,000 and purchased it for $200,000. They have lived in the home for the last 20 years. How much of the gain is included in their gross income?	c. $50000
Selling price of the  house	$ 750,000.00
Less: Purchased price	$ 200,000.00
Capital Gain	$ 550,000.00
Capital Gain Exclusion	$ 500,000.00
Capital gain Included in Gross Income	$   50,000.00