Question: Myrtle loaned Sven 150 000 for his gardening supplies company A
Myrtle loaned Sven $150,000 for his gardening supplies company. A drought occurred during the year. Because Sven was unable to repay the loan, Myrtle accepted the following plan to extinguish Sven’s debt. Sven is to pay cash of $3,000 and transfer ownership of the gardening property having a value of $80,000 and a basis of $60,000. Sven must also transfer stock with a value of $30,000 and a basis of $45,000. Find a relevant Treasury Regulation. Read Code Section 108 and James J. Gehl, 102 T.C. 74 (1994). Determine how much gross income Sven should report from the extinguishment of his debt.
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