Question: Harry purchased equipment for his business and gave the seller
Harry purchased equipment for his business and gave the seller cash and a note due in two years. Carrie also purchased business equipment, but financed the transaction with a bank loan. Because both Harry and Carrie were having financial difficulties, the creditors reduced the balance due on each mortgage by $50,000. What are the Federal income tax effects of the debt adjustments experienced by Harry and Carrie?
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