Jake takes out a $10,000 loan. Later, Jake becomes unable to pay off the loan when the loan balance is $4,000. So, the lender makes a decision to cancel (forgive) the remaining balance on the loan. At the time of the debt cancellation, Jake's assets exceeds his liabilities by $12,000 (i.e., Jake is solvent). How much must Jake include in gross income as a result of the cancellation? 

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When a lender forgives a debt the amount forgiven is t... View the full answer