Francesco owns a warehouse that is used in his auto parts store. The warehouse has a FMV of \($85,000,\) an adjusted basis of

\($45,000,\) and an outstanding mortgage of \($55,000.\) Francesco is not bankrupt or insolvent, but due to COVID-19, he is having trouble making the payments on the mortgage and is able to persuade the bank to forgive \($25,000\) of the debt. What are the tax consequences for Francesco?