Question: Bud borrows $20,000 from a friend. Before he can repay any of the loan, the friend dies. His friends will provides that any amounts owed

Bud borrows $20,000 from a friend. Before he can repay any of the loan, the friend dies. His friend’s will provides that any amounts owed to him are to be forgiven upon his death.

Identify the tax issue(s) posed by the facts presented. Determine the possible tax consequences of each issue that you identify.

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