Kay was released from her obligation to pay personal credit card debt. She owed $10,000 to her credit card company, which agreed to accept $2,500 as payment in full. Before paying the credit card company, it was determined Kay was solvent and not in bankruptcy. The credit card company issued Kay a Form 1099-C, reporting $7,500 as the amount of debt discharged. What amount would be reported as income on Kay's Form 1040?

Answer rating: 100% (QA)

In this scenario when a creditor forgives or cancels a debt the forgiven amount generally becomes ta... View the full answer